Consumer Payment Card News

Bankruptcy Surge

With unemployment rising and new bankruptcy laws on the horizon, it is little wonder that the number of bankruptcy filings during the first part of this year have soared. Between January 1 and March 31, the number of bankruptcies filed increased by 17.5% over the same period last year. The number of filings during the three month period were the highest since the spring of 1998. The spike in filings may be driven in part to the pending bankruptcy reform legislation which will prevent consumers, with good incomes, from filing a Chapter 7 petition. The bankruptcy reform bills are soon to be conferenced and will become effective six-months after the President’s signature. According to stats released this week by the Administrative Office of U.S. Courts, the number of filings during the second fiscal quarter (Jan1-Mar 31) hit 366,841 compared to 312,335 one year ago. During the twelve-month period ending Mar 31, 2001, the number of bankruptcies filed totalled 1,307,857 compared to 1,301,205 filed during the same period ending Mar 31, 2000. Of the total filings during the year ending Mar 31, only 35,992 were business filings. California continues to lead the nation with the highest number of personal bankruptcy filings. During the twelve-month ending Mar 31, nearly 134,000 non-business filings were made in California.
Another study recently found that bankruptcy among consumers 25 years and younger rose 51% during the 1990s. According to the Harvard University study, about 118,000 consumers under 25 years of age filed for bankruptcy during 1999, compared to 60,000 in 1990.

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