Consumer Bankruptcies High in April as Families Struggle with Subprime Fallout
Although the month of April resulted in fewer job losses than expected, bankruptcy filings by U.S. consumers rose 47.7 percent from one year ago as families cope with fallout from the subprime mortgage crisis.
According to the American Bankruptcy Institute, 92,291 bankruptcy filings in April also marked an increase of 7 percent from March.
"The sharp spike in consumer bankruptcies reflects the growing financial stress faced by American families, saddled with household debt and mortgage woes," said Samuel Gerdano, executive director of the institute.
"We expect consumer bankruptcies to top 1 million new cases this year".
For all of 2007, there were 850,912 U.S. bankruptcy filings, up 38 percent from 2006.
The all-time high of more than 2 million consumer bankruptcy filings occurred in 2005, just before the federal bankruptcy law was reformed to make it more difficult for consumers to discharge their debt under Chapter 7 of the law.
The reforms also increased debt payments required under Chapter 13 filings and eliminated some protections such as delaying housing evictions or delaying child support proceedings.
Published on May 2, 2008
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