Double-digit jump in bankruptcies

Bankruptcy filings rose 20 percent in the 12-month period ending in
June, according to the Administrative Office of the U.S. Courts.

The
over 1.5 million filings marks the highest number of bankruptcies to
occur in a 12-month period since the bankruptcy reform act was enacted
in 2005.

The legislation was intended to make it harder to file for bankruptcy by restricting the number of Chapter 7 filings, which forgive most debts, and pushing debtors to file Chapter 13, which requires some of the debt to be repaid. The bill created a means test to determine which filings could use which bankruptcy.

When the bill passed Congress, several who opposed it said it was wholly created by the credit card companies because Chapter 11 bankruptcies, which businesses mostly use to organize debts, was not a part of the reform. 

Supporters of the bill contended Chapter 11 bankruptcy was not materially altered because the legislation was aimed at addressing individual bankruptcies.

Tuesday’s findings show that individual and business bankruptcies increased over last year, up 21 percent and 8 percent, respectively. 

Chapter 7 filings jumped the most, with over 1.1 million filings, up 25 percent from last year. Chapter 13 filings increased 10 percent over the same time period. 

Chapter 11 filings totaled 14,272 and were up 2 percent over last year.