After a period of relatively low bankruptcy filings during 2006-07, consumer bankruptcies once again surpassed one million in 2008 and continue to climb in 2009. The increase in individual bankruptcies during 2008-09 has been most acute in those states with the highest rates of foreclosure, including California, Nevada, Florida and Arizona. The “heat map” of foreclosures correlates closely with bankruptcy filing trends as courts in these states saw shocking bankruptcy numbers in 2008. Bankruptcies have risen every quarter from the 2006 lows observed in the wake of the enactment of the Bankruptcy Abuse and Consumer Protection Act (BAPCPA).

The May 2009 consumer filing total of 124,838 represents a 37 percent increase in consumer filings from the same period a year ago, according to data from the National Bankruptcy Research Center (NBKRC). Overall, the 558,986 bankruptcy filings for the first five months of 2009 are nearly 36 percent higher than the 411,840 filings registered during the same period in 2008 (Jan. 1 - May 31), according to NBKRC data.

As consumers continue to face increasing levels of unemployment and rising foreclosure rates, bankruptcy filings will continue to accelerate as families seek financial relief from the tough economic climate. We predict more than 1.4 million new bankruptcies by year end.