Bankruptcies Increased 32% In ‘09

Last year was the seventh-worst year on record for the number of business and consumer bankruptcies, with more than 1.4 million petitions submitted, the Associated Press reported. Data was gathered from the nation’s 90 bankruptcy districts and found 1.43 million filings, an increase of 32% from 2008. There were 116,000 recorded bankruptcies in December, up 22% from the same month a year before.

Some experts believe that the increase is due to a “natural recovery” as consumers and attorneys become accustomed to a recent overhaul of bankruptcy laws; the numbers indicate clear correlations to recession-weary regions. Arizona saw the fastest increase, a jump of 77% from the year before, followed by Wyoming at 60%, Nevada at 59% and California at 58%.

For three years, filings have been steadily rising back toward levels reached early in the decade before Congress overhauled the nation’s bankruptcy laws. The 2005 alterations made bankruptcy filings more cumbersome, a move that followed fears from lenders that some consumers were abusing the system to wipe away debts.

Bankruptcies surged to slightly more than 2 million in 2005 as consumers rushed to file before the new law took effect, but then plummeted to 600,000 in 2006. They’ve been climbing ever since and in 2009 became the seventh-highest year on record, only behind the years 1998 and 2001-2005. The 2005 spike had been preceded by a steady climb from 1.5 million in 2001 to 1.6 million in 2005.