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Bankruptcy Filings Spike in February 2009

posted by Bob Lawless

2009 Monthly Filings Thru February The good folks at Automated Access to Court Electronic Records (AACER) sent some preliminary numbers on February 2009 bankruptcy filings, and the news is not good. The bankruptcy filing rate is at its highest rate since the 2005 changes to the U.S. bankruptcy law and are approaching the level they were at before the law's passage. The 2005 bankruptcy law made it more expensive and more hassle for consumers to use the bankruptcy system, and the return to pre-2005 bankruptcy filing levels shows how U.S. households are hurting. (A click on the image will open up a full-sized version.)

There were over 103,000 bankruptcy filings in February 2009. Spread over the 19 business days of February, the filing rate is 5,433 filings per day. The figure is a 22.0% jump over the January 2009 filing rate, although the better comparison is to the November 2008 filing rate because bankruptcy rates typically fall in December and January due to seasonal variations. As compared to November 2008, the increase is 9.8%, which is still a big jump for bankruptcy filing rates. The February 2009 filing rate represents a year-over-year increase of 29.9% as compared to February 2008.

The bottom line is that the declines in the bankruptcy filing rate we saw in December and January were temporary and due to seasonal variations. As they have for the past several years, the bankruptcy filing rate has again jumped in February. We seem to be well on our way to my predicted filing rate of 1.4 million bankruptcy filings for the 2009 calendar year. The American middle class is hurting, and its showing up in the bankruptcy courts.


Yup! "Steady Freddy" here and picking up! We had 25 total consumer BKs. (20-13s, 5-7s) Mostly to protect homes! It seems like that the debtors are either too far behind or NOT behind at all and it is those two reasons why Servicers are NOT MODIFYING Mortgage terms!

I am really tired of having to tell people there is not much we can do for their Option ARMS and 80/20s in Bankruptcy! "BLUE DOGS" need to get down to some real level! They need to come down to STX and sit in my chair for just one week to see!

As filings are picking up, it may be beneficial for some to catch up on Judge Bufford's ruling of In re: Vargas directly.

The Home Equity Theft Reporter covered the info nicely...

Northern District of Illinois, Eastern Division

2008 2009
January 2284 3191
February 2610 3666
YTD 4894 6857

3666 for Februaru is the most in any month since October 2005
Previous high was October 2008, 3483

Have I mentioned the "kind" of debtors we are seeing lately? Upper Middle to High income. I had one debtor the other day that wondered (out loud) how she could live on less than $8k per month!!! ??? Every situation is different. Snowflakes for sure.

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