Those looking for economic bright spots will not find it in foreclosures or bankruptcies. Please consider Sharp Increase in March in Personal Bankruptcies from the New York Times.
Federal courts reported over 158,000 bankruptcy filings in March, or 6,900 a day, a rise of 35 percent from February, according to a report to be released on Friday by Automated Access to Court Electronic Records, a data collection company known as Aacer. Filings were up 19 percent over March 2009. The previous record over the last five years was 133,000 in October.
“Even with the restrictive new law, we’re back up over where we were before the law changed,” Mike Bickford, president of Aacer, said in a phone interview Thursday from his headquarters in Oklahoma City.
Other experts point out that filings invoking Chapter 7 of the bankruptcy code, a simple and inexpensive option, are rising faster than more complex Chapter 13 reorganization filings, under which consumers repay a portion of their debts so they can keep their homes, suggesting that more homeowners are simply walking away from underwater mortgages.
Statistics from the United States Trustee Program, the Justice Department office that oversees bankruptcy cases, show that Chapter 7 filings as a percentage of all bankruptcies have increased to about 73 percent in 2009 from about 62 percent in 2006-07. Of the 158,141 bankruptcy filings in March, 118,505, or 75 percent, were Chapter 7s and 38,241 were Chapter 13s, the Aacer report says.
The Debt Slave Act of 2005 (better known Bankruptcy Reform Act of 2005) continues to make complete fools out of its sponsors. After the bill passed, banks made very poor loans figuring people would be forced into chapter 13 and would have to pay the loans back some way somehow.
Well, people without a job cannot restructure anything, nor would they want to if they could, because most of them are hugely underwater in houses.
Banks got everything they wanted in the bill. It is fitting it blew up in their faces.
Mike “Mish” Shedlock
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