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Personal Bankruptcy Up 14% In First Six Months Of 2010

The national bankruptcy rate numbers are in for the first six months of 2010, and the news is not great. According to the American Bankruptcy Institute (ABI), the personal bankruptcy rate in the United States is up 14 percent compared to the first six months of 2009 – a rate that is almost as high as in 2005, when federal bankruptcy laws changed, causing a surge in filings.

Financial experts say that the increasingly high personal bankruptcy rates are caused by a confluence of recent problems, including the current unemployment rate, the bottoming out of the housing market, and the recent economic crisis. Generally, large amounts of debt paired with record low personal savings rates have also been a significant cause of bankruptcy. However, recent studies have also shown that a majority of bankruptcies has been caused by medical bills and medical emergencies – whether or not individuals were covered by health insurance plans.

While some would like to blame consumers for the rise in bankruptcies – saying that many irresponsible spending has factored into the problem – others say that years of predatory lending have finally had an effect on everyday families. In either case, bankruptcy experts say that the higher rates of bankruptcy will not subside any time soon. Many families who probably choose bankruptcy are still delaying the decision, while other families who wish to declare bankruptcy can’t afford the legal fees associated with the procedure. Currently, declaring Chapter 7 bankruptcy can cost a family roughly $1,500.

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