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Bankruptcy News
Personal Bankruptcy Filings Doubled In Last Decade As Consumer Debt Reached Record Levels
There was one bankruptcy filed for every 73 U.S. households during calendar year 2003, up 97 percent from the 144 U.S. households per bankruptcy filing in 1993, according to the American Bankruptcy Institute (ABI). Personal bankruptcies peaked in 2003, when a record 1,625,208 cases were filed, nearly double the 812,898 filings in 1993.
The 99 percent increase in personal bankruptcy filings in the last decade is consistent with the growth in consumer debt. Data from the Federal Reserve indicates that household debt, at $8.9 trillion last year, is at a record high relative to disposable income. Some analysts are concerned that this unprecedented level of debt might pose a risk to the financial health of American households. A high level of indebtedness among households could lead to increased household delinquencies and bankruptcies, which could threaten the health of lenders if loan losses are greater than anticipated.As the Federal Reserve Board prepares to raise short-term interest rates from their 46-year low of 1 percent, consumer debt could become more costly, further burdening household balance sheets.
The influence of total consumer debt on bankruptcy filings is illustrated in the following chart, http://www.abiworld.org/statcharts/CDebt.pdf, released today by ABI. Rising consumer debt typically forecasts an increase in bankruptcies, while a decline usually results in a slowing of the rate of filings, or even a net decline in new bankruptcies.
"The U.S. economy relies primarily on consumer spending, but rising levels of household debt can put a heavy burden on families," said Samuel J. Gerdano, Executive Director of the ABI. "When families sustain an unexpected financial setback on top of this burden, they often resort to bankruptcy as a way out," he said. "Naturally, consumer bankruptcies were filed during 2003 at a rate of 185 per hour."
There are defined legal debtor rights
Debtor-creditor law governs situations where one party is unable to pay a monetary debt to another. While you have an obligation to pay your bills on time, there are laws to protect your rights if you should find yourself being pursued by a debt collection agency.
New Bankruptcy Law 2005
Beginning on October 17, 2005, most individual debtors filing for bankruptcy relief were required to complete either Official Bankruptcy Form B22A ... Read more >
Definition:
Generally, the property of the debtor that is subject to the jurisdiction of the bankruptcy court.
United States Trustee
Definition:
An agent of the U.S. Department of Justice appointed to assist in bankruptcy cases. The U.S. Trustee administers many of the duties of the court including appointing committees.
Asset
Definition:
An economic resource or item owned by a business that is expected to benefit its future operations.
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