Tuesday, August 15, 2006

Bankruptcy Filing Heads Back Up

MSN Money has this report on a pickup in bankruptcies. "Consumer bankruptcy filings continue to increase, with Chapter 7 liquidation filings rising 54% in the second quarter compared to the previous three months. Consumer bankruptcies had plunged following the passage of a tough new bankruptcy law last year. By the second quarter, however, the pace of filings had picked up to 2,200 to 2,300 new filings per business day, more than four times the level in November 2005 after the bankruptcy law went into effect, according to Lundquist Consulting."

"Individuals filed 85,449 Chapter 7 cases in the three months ended June 30 and 142,815 bankruptcy cases overall, a 39% increase from the previous quarter."

"Meanwhile, the leading credit-counseling organization says bankruptcy reform is putting unprecedented strain on counselors' finances. Bankruptcy filers are required to undergo credit counseling before they can proceed with their cases, and agencies affiliated with the National Foundation for Credit Counseling say such sessions now comprise one-third to one-half of their caseload, according to marketing director Bob Ensinger.'

"But many debtors arrive at the counselors in such sorry shape that they can't pay the nominal fee the nonprofit agencies impose. 'We're running (these sessions) at a loss,' Ensinger said."

"If charge-offs and other delinquencies start to tick up, however, we could see the pace of bankruptcy filings quickly follow.

Credit counselors are already reporting an increase in the number of debtors seeking help because of high gas prices and adjustable-rate mortgages that have reset at higher rates. Those debtors may well enter the bankruptcy pipeline in the next year or so."

"Lundquist thinks filings could eventually return to 90% of the old rate, although the pace will depend on the long-term effects of the new law. 'Are more people discouraged from filing bankruptcy? Will more file Chapter 13s instead of Chapter 7s? Will more people chose alternatives to bankruptcy?' Lundquist asked. 'It's just too early to know.'"


At 6:18 PM, Blogger dimitris said...

Ben, here's an interesting article on foreclosures:



At 8:56 AM, Blogger ALEISH said...

Good day Ben!

I want to share this article I read, Just Say No To Filing Bankruptcy, it is about the things you should know before filing bankruptcy

Hope this resource be useful to your blog and your readers.


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