Bankruptcies rise in June, up 34% over 2008

08.11.09
By Lewis Green

Although American consumers have been getting some better economic news in recent weeks it appears to have not been enough to stop the growing number of bankruptcies. A recent report finds that credit card debt, home loans and other financial problems caused 126,434 bankruptcies in July.

According to the American Bankruptcy Institute (ABI), figures it put together from the National Bankruptcy Center Research Center show that the July monthly bankruptcy filings reached their highest level since the bankruptcy law was overhauled in 2005.

Samuel J. Gerdano, executive director for the ABI, said he expects bankruptcy filings to continue to rise as job losses remain high.

"Today's bankruptcy filing number reflects the sustained and growing financial stress on U.S. households," he said. "Rising unemployment on top of high pre-existing debt burdens is a formula for higher bankruptcies through the end of this year."

July's numbers show bankruptcies increasing 8.7 percent over June's numbers, but also showing a more dramatic rise of 34.3 percent since July 2007.

In a previous report from ABI, Gerdano said his group anticipates that there will be 1.4 million bankruptcies in the U.S. by the end of the year on the back of unemployment.

But workers got some good news last week when the Department of Labor released the July unemployment data. Although most experts predicted the unemployment rate might reach 9.8 percent, the jobless rate actually fell from 9.5 percent in June to 9.4 percent last month.

Another form of good news came yesterday from the Federal Reserve as its monthly data showed that Americans appear to be paying down their credit card debt. According to the report, revolving credit - which consists mostly of credit cards - fell by $5.3 billion in June.

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More Americans faced bankruptcy in June