Consumer Bankruptcies Fall In First Half Of Year

The number of U.S. consumers filing for bankruptcy protection fell sharply in the first half of 2011, according to the American Bankruptcy Institute (ABI), relying on data from the National Bankruptcy Research Center (NBKRC).

Filings totaled 709,303 nationwide during the first six months of 2011, an eight percent decrease from the 770,117 total consumer filings during the same period a year ago. Economists said it could be a hopeful sign that consumers are beginning to better cope with their debt loads.

"The drop in bankruptcies for the first half of the year shows the continued efforts of consumers to reduce their household debt, and the overall pull back in consumer credit," said ABI Executive Director Samuel J. Gerdano.

5% decrease

The overall June consumer filing total of 119,768 represented a five percent decrease from the 126,270 filings recorded in June 2010. The June 2011 filings represented a four percent increase from the May 2011 consumer bankruptcy total of 114,803 filings. The percentage of chapter 13 filings for June was 28 percent, a one percent increase from May.

Bankruptcy laws are designed to help people who can no longer pay their creditors get a fresh start, by liquidating assets to pay their debts or by creating a repayment plan. Most cases are filed under the three main chapters of the Bankruptcy Code – Chapter 7, Chapter 11, and Chapter 13. Federal courts have exclusive jurisdiction over bankruptcy cases. This means that a bankruptcy case cannot be filed in a state court.