In that article I discussed major changes to US Bankruptcy law that took effect in Nov 2005 - causing over 2 Million people in the US to file before the deadline that year.
The new (harsher) law worked as intended and filing numbers were dramatically down in 2006 and 2007 (590K and 826K respectively). 2008 however, was a year of major economic turmoil and the year ended with over 1M new filings.
I later opined (in that same article) that we'd likely see these numbers get far larger as the economic downturn intensified (forecasting 1.7M in 2009) and even stated 2010 would likely break all previous filing records (we'll soon see).
Anyway, new data from the American Bankruptcy Institute (July 2, 2009 release) highlights the fact that these filing numbers are indeed rising quickly, with no relief in sight:
July 2, 2009, Alexandria, Va.— U.S. consumer bankruptcy filings totaled 675,351 nationwide during the first six months of 2009 (Jan 1-June 30), a 36.5 percent increase over the 494,610 total consumer filings during the same period a year ago, according to the American Bankruptcy Institute (ABI), relying on data from the National Bankruptcy Research Center(NBKRC). The overall June consumer filing total of 116,365 was 40.6 percent more than the 82,770 consumer filings recorded in June 2008. While the June total represented an increase over the previous year, it was a 6.8 percent decrease from the May 2009 total of 124,838 consumer filings. Chapter 13 filings constituted 27.7 percent of all consumer cases in June, a slight increase from May.
“As unemployment, foreclosures rates and health care costs continue to rise, more consumers are turning to bankruptcy as a last financial resort,” said ABI Executive Director Samuel J. Gerdano. “We expect that there will be more than 1.4 million new bankruptcy filings by year end.”
Another release today from CNN Money stated - Credit delinquencies hit record high - Mounting job losses and fallout from housing bust make it tough for consumers to make payments on bank cards and other loans.
NEW YORK (CNNMoney.com) -- Soaring unemployment and the housing bust are leaving consumers hard-pressed to make loan payments on everything from credit cards to cars.
The percentage of borrowers at least 30 days late paying a balance is the highest since the group began keeping records in 1974.
The statistics are "a natural consequence of mounting job losses in a weakening economy," ABA Chief Economist James Chessen said in a statement.
The economy is losing jobs by the thousands, and mass layoffs and pay cuts have exacerbated the credit crunch. Banks have heightened lending standards because of default risk, providing less credit to consumers.
"The number one driver of delinquencies is job loss," Chessen said. "When people lose their jobs, they can't pay their bills. Delinquencies won't improve until companies start hiring again."
The data speaks for itself and depending on how bad the US unemployment situation gets in 2009 (I expect it to get much worse) I anticipate that even my 1.7M forecast will be met.