Reuters: US consumer bankruptcies up 14 pct in first half (Record since 2005 law overhaul)

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US consumer bankruptcies up 14 pct in first half

NEW YORK | Fri Jul 2, 2010 5:19pm EDT

July 2 (Reuters) - U.S. consumer bankruptcy filings increased 14 percent in the year's first half to the highest level since the nation's bankruptcy code was overhauled in 2005, the American Bankruptcy Institute said on Friday.

The number of filings rose to 770,117 from 675,351 a year earlier, the group said, citing data from the National Bankruptcy Research Center.

Sam Gerdano, the ABI's executive director, said the increase stemmed from years of rising consumer debt levels and low savings rates, together with high unemployment and the nation's housing difficulties.

Though consumer filings dropped 8 percent in June from May to 126,270, Gerdano projected there will be more than 1.6 million new bankruptcy filings in all of 2010.

The U.S. Labor Department earlier said U.S. nonfarm payrolls fell 125,000 in June, the largest drop since October. An increase of 83,000 jobs at private businesses was more than offset by layoffs of 225,000 temporary census workers. The unemployment rate was 9.5 percent.

Experts say bankruptcies typically peak in an economic cycle between six and 18 months after an economy bottoms out. They say this is in part because many people seek court protection only after pursuing other means to cut debt. (Reporting by Jonathan Stempel, editing by Leslie Gevirtz)

This is a record high since 2005 bankruptcy law was changed, much harder now to claim bankruptcy. Creditors are not collecting based on hardship of borrower, rather than convenience.

If everyone were to go bankrupt, that would really send a message, recoup the bailout money given to companies that should have been allowed to fail, and destroy the controls and the hold this greedy, usurious industry has over us. It's the only way.