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03-26-06,11:50am
Surprise: Bankruptcy filings shot up a record 30 percent in 2005. Donna M. JablonskiThe Administrative Office of the U.S. Courts reports 2,078,415 bankruptcy petitions (2,039,214 of which were “non-business,” or individual, filings) filed last year, compared with 1,597,462 in 2004. That’s more bankruptcy filings than ever before recorded in the history of our federal courts.
The surge in filings is being blamed on the misnamed “Bankruptcy Abuse Prevention and Consumer Protection Act,” which took effect on Oct. 17, 2005. The law makes it harder for people to clear their debts through bankruptcy, and the common assumption is that people rushed into bankruptcy court (like it’s a fun place to be) before the new law kicked in. But the sobering fact is that bankruptcy filings during October through December 2005 also hit an historic high for any quarter. Remember: Most people who file for bankruptcy are forced to do so by massive health care bills.
Square these facts with President Bush’s State of the Union declaration that “Our economy is healthy and vigorous.”
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