US Bankruptcies Surge To 5 Year High

08-18-2010 • ZeroHedge.com

The Administrative Office of the U.S. Courts reports that personal bankruptcy filings for the year ended June 30, 2010 surged to a five year high, hitting 1.57 million, a 20% increase from the prior year. Furthermore, in the period between April and June, there were 422,061 bankruptcy filings, a 9% increase from the 388,148 in the previous quarter, and up 11% from 381,073 a year earlier. As Reuters highlights, quarterly filings surpassed 400,000 for the first time since a record 667,431 bankruptcies were begun in the fourth quarter of 2005, when Congress overhauled federal bankruptcy laws and made it harder for people and businesses to file. Yet while that was an administrative adjustment to bankruptcy law, this time it is all organic, and an indication of the ongoing incapability of America's politicians to fix the economic collapse. Indicatively, Nevada had the highest rate of filings on a per capita basis in the last year, with 11.74 per 1,000 people, while Alaska had the fewest, with just 1.58 per 1,000. The states with the most bankruptcies were California (241,975), Florida (107,373), Illinois (80,801), Georgia (77,809), and Ohio (72,924). A full split of all bankruptcies by state and by filing type is presented below. More from Reuters: "We know the causes of bankruptcy are principally job losses and health care, with the overlay of the foreclosure crisis," said Deborah Thorne, an associate professor of sociology at Ohio University. "It feels very unsettled, and I'm not surprised the numbers are going up. Until we get our feet on the ground, provide decent-paying jobs, and do something with the housing crisis, bankruptcies will continue to go up." According to her website, Thorne has co-authored several publications with Elizabeth Warren, a candidate to run the new federal Consumer Financial Protection Bureau. Last Tuesday, the U.S. Federal Reserve said high unemployment, reflected in July's 9.5 percent rate, as well as modest income growth, falling home prices and tight credit amid a contraction in bank lending were factors contributing to a slowdown in economic growth. Nevada had the highest rate of filings on a per capita basis in the last year, with 11.74 per 1,000 people, while Alaska had the fewest, with just 1.58 per 1,000. Among the most populous states, California ranked 7th in per capita filings, while Texas was 48th, New York 41st and Florida 15th.