Bankruptcy Filings Hit 18-Year Low. Good News ???
The number of Americans filing for bankruptcy hit an 18-year low last year, in part, because filings had surged in late 2005 before the new bankruptcy laws took effect. Last year, 600,000 individuals filed for bankruptcy; the smallest number of filings since 1988. Filings in 2006 were down a whopping 71 percent from 2005.
Samuel Gerdano, executive director of the American Bankruptcy Institute, a non-partisan research group, attributed the drop in filings to the huge surge in filings in 2005. Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act in 2005 in an effort to protect creditors. After the law was passed, consumers flocked to file before the law took effect.
Many experts expect bankruptcies will be back to normal in 2007, partly due to the recent fallout in the mortgage industry and related foreclosures. Gerdano said the “underlying economic condition are ripe for consumer bankruptcies to go back up.”