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Consumer Bankruptcy Filings Soar 15%February filings the highest since new bankruptcy law enacted |
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March 4, 2008
“February's bankruptcy spike -- the highest single month since the 2005 law changes -- forecasts the start of more to come for the balance of 2008,” said ABI Executive Director Samuel J. Gerdano. Overall consumer filings totaled 76,120 in February, compared with from the 66,050 in January. The figure was also up 37.3 percent from February 2007. Chapter 13 filings constituted 36.4 percent of all consumer cases in February, down slightly from last month. This category of bankruptcy is available for an individual with regular income whose debts do not exceed specific amounts. The data was compiled by the National Bankruptcy Research Center (NBKRC). Chapter 13 is typically used to budget some of the debtor’s future earnings under a plan through which unsecured creditors are paid in whole or in part. Other types of filings include:
Congress may actCongress is considering changes to U.S. bankruptcy law, possibly giving judges wide authority to not only reduce interest rates, but actually reduce the amount of a homeowner's mortgage. "Home ownership is a pillar of our economy, and an integral part of the American dream. But the headlines that have filled the newspapers lately have described a nightmare," said Sen. Richard Durbin (D-IL), author of the bill. "Thousands of families are losing their homes, and millions more are at risk of foreclosure. Whatever the reason that families may find themselves unable to pay their mortgages, the effect of foreclosure is the same: disaster for the family, for the surrounding neighborhood, and for the economy," Durbin said. The provisions of Durbin's bill have been folded into the Democratic foreclosure prevention package introduced earlier this month. Durbin says hundreds of thousands of homeowners would be able to modify their mortgages in bankruptcy to avoid foreclosure if his legislation were signed into law. By some estimates, the collapse of the subprime mortgage market has put approximately 2.2 million families in danger of losing their homes. Durbin's bill, The Helping Families Save Their Homes Act, will allow these families, as a last resort, to file for Chapter 13 bankruptcy and work with a judge and the lender to modify the mortgage so families can make affordable payments and keep their homes. Report Your Experience
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