With over 158,000 bankruptcy filings, March has weighed in as the month with the most bankruptcy filings since bankruptcy reform was implemented in October 2005.
Federal courts reported over 158,000 bankruptcy filings in March, or 6,900 a day, a rise of 35 percent from February, according to a report to be released on Friday by Automated Access to Court Electronic Records, a data collection company known as Aacer. Filings were up 19 percent over March 2009. The previous record over the last five years was 133,000 in October. .. Statistics from the United States Trustee Program, the Justice Department office that oversees bankruptcy cases, show that Chapter 7 filings as a percentage of all bankruptcies have increased to about 73 percent in 2009 from about 62 percent in 2006-07. Of the 158,141 bankruptcy filings in March, 118,505, or 75 percent, were Chapter 7s and 38,241 were Chapter 13s, the Aacer report says.
The continued increase in Chapter 7 bankruptcy filings is just what the 2005 bankruptcy reform laws were designed to prevent. However, the rising number of Chapter 7 bankruptcy filings is not just a reflection of how the 2005 bankruptcy reform laws were flawed, but a reflection of how very real challenges such as unemployment and falling home values actually push individuals into Chapter 7 bankruptcy. Many Americans are choosing Chapter 7 bankruptcy over Chapter 13 bankruptcy , not because they want to "avoid" paying their debts because they lack the ongoing income necessary to fund a Chapter 13 bankruptcy repayment plan due to the long-term unemployment crisis gripping the nation. And even when individuals are able to find new employment it is often insufficiently compensated to cover the amount of debts they have incurred.