Consumer Payment Card News

Bankruptcy Boomerang

Over the past seven years, approximately 9.5 million Americans have filed for personal bankruptcy, and next year about one million of these consumers will be eligible to file again. Under the current bankruptcy code, consumers can file a Chapter 7 bankruptcy every seven years. About three quarters of all non-business bankruptcy filings are Chapter 7, or full liquidation, personal bankruptcies. According to figures recently released by the Administrative Office of the U.S. Courts, total bankruptcy filings hit a record 1,611,260 in the twelve-month period ending March 31st. In the first three months of this year, a record 412,968 bankruptcy petitions where filed, compared to 395,129 for the final three months of 2002. Meanwhile, Congress remains unable to pass a bankruptcy reform bill. Last year, the legislation was hung up over a provision aimed at preventing abortion clinic protesters from using bankruptcy to avoid paying fines. Sen. Orrin Hatch say he intends to bring the measure directly to the Senate for a vote this year. The House of Representative has passed bankruptcy reform without the abortion protest provision. If passed, the legislation, which would take six months to become law, is expected to cause a spike in filings.

       (For the 12-Month Period Ending March 31st)
  Year Filings
2003 1,573,720
2002 1,464,961
2001 1,271,865
2000 1,263,096
1999 1,378,071
1998 1,370,490
1997 1,193,057
Source: Administrative Office of the U.S. Courts

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