It is more bad news for the United States economy, as data recently released by the Administrative Office of the U.S. Courts indicates both consumer and corporate bankruptcy filings increased dramatically in 2009.

According to the report, the total number of U.S. bankruptcies filed during the first three months of 2009 increased 34.5 percent over the same period in 2008 nationwide.   Business filings were up 64.3 percent for the first quarter of 2009 versus the same period last year, while consumer filings increased 33.4 percent. The data shows a staggering 6000+ bankruptcy filings per day for the month of May, and rising.

Bankruptcy filings had decreased dramatically after a 2005 bankruptcy reform measure was signed into law to curb bankruptcy abuse and make it harder to erase debts. A record 2 million filings took place in 2005, with many consumers trying to beat the deadline before the more restrictive laws went into effect. If trends continue at the pace indicated in the first quarter,  consumer and commercial bankruptcy filings are projected to reach a stunning 1.5 million, up significantly from the 1.1 million recorded in 2008.

The increase in bankruptcies is no doubt a result of the economic chaos that has plagued the country for the last year or more. With unemployment at record levels, credit harder to come by, and 401ks vanishing into thin air, it should come as no surprise that many individuals feel that bankruptcy is their only option.

The areas hardest hit by bankruptcy filings seem to correlate to some degree those experiencing the biggest hits on the housing crisis, as well as corporate bankruptcy. According to the data, Nevada, Michigan and California had the biggest per-capita increase in bankruptcy filings in May.

Bankruptcy filings are generally considered a “trailing indicator”, which means that most of these individuals or businesses have been experiencing financial problems for a while. Until the unemployment rate and other economic indicators stabilize and begin to recover, it is likely that the numbers will continue to rise.

If you are considering filing for bankruptcy, understand the basics of how bankruptcy works and consider alternatives to bankruptcy first – bankruptcy should be your last resort.

For more detailed information regarding the report, go to the American Bankruptcy Website.

Related posts:

1. Phishing Attacks Spike Amid Recession At the end of 2008, we reported in this blog...
2. Bad Credit + Hunger + Unemployment = Recession The blog title sounds like a simple mathematical problem, but...
3. Seven Things You May Not Know About Bankruptcy Though I rarely recommend bankruptcy (usually because the person does...
4. How Will General Motor’s Bankruptcy Affect the Consumer? General Motors, one of the largest U.S. automobile manufacturers, has...
5. What Can You Expect After a Bankruptcy? The Time Line Recently, someone called this article to my attention, which extolls...