US consumer bankruptcy filings jumped nearly 33 percent in 2008 amid a recession that's expected to keep filings rising into the new year.
Overall consumer filings reached 1,064,927 last year, up from 801,840 in 2007, according to data collected by the National Bankruptcy Research Center and published by the American Bankruptcy Institute, an Alexandria-based research group.
A recession that began in December 2007 has stretched many consumers who are turning to bankruptcy protection amid job losses, mortgage foreclosures and heavy personal debt.
"Consumers are under great financial stress, with no immediate end in sight," Samuel Gerdano, the institute's executive director, said in a news release. "We expect the upward spike in personal bankruptcies to continue in 2009."
The 2008 rate of increase fell short of the 40 percent rise recorded in 2007, and the annual total in both those years is still far short of the more than 2 million recorded in 2005 alone. A law that took effect in October 2005 made personal bankruptcy filings more difficult and sharply curtailed filings in 2006 to about 573,000, the lowest level since 1998.
The 2005 law mandated an income test to measure a debtor's ability to repay obligations. Consumers deemed to have insufficient assets or income can still eliminate debts through a Chapter 7 bankruptcy. But those with income above their state's median income who can pay at least $6,000 over five years are forced into Chapter 13, where a debt repayment plan is ordered.
Filings by consumers, rather than businesses, make up the vast majority of all bankruptcies.