Personal Bankruptcy Filings Surges

According to the American Bankruptcy Institute, the total number of personal bankruptcy filings in February 2010 was up 14 percent compared to the previous year.

Samuel Gerdano, executive director of the American Bankruptcy Institute, explains that "The debt-stress overhang from years of consumer spending has a more acute impact now because of troubling economic times."

Compared to 2009, more consumers are choosing Chapter 7 bankruptcy, which allows the court to discharge most unsecured consumer debt, including credit card bills. In previous years, more families relied on Chapter 13 bankruptcy, which requires repayment in part or full over several years. Consumers typically choose Chapter 13 to protect their homes.

States Gerdano, "We are already on a faster pace in 2010 than we were a year ago. Consumer filings will likely surpass 1.5 million filings this year."

Before the housing crisis, consumers could borrow against the value of their homes. Now credit markets are tight, home values are down and consumers don't have the same ability to borrow money to avoid bankruptcy.

Consumers need to realize they are not alone in dealing with debt. The sooner they reach out for help, the better their financial options will be.

Visit Debt Freedom Tips for resources to help you deal with financial stress.

Source: USA Today, reporting on data from the American Bankruptcy Institute
http://www.usatoday.com/money/economy/2010-03-03-bankruptcy03_ST_N.htm

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