The number of bankruptcy filings climbed higher during March.
Perhaps the most major shock a consumer's financial standing can take is the result of declaring for bankruptcy, though more people are turning to that solution as debt mounts.
According to a recent report from Automated Access to Court Electronic Records, there were more than 158,000 bankruptcies filed in the country in March. That represents a 35 percent increase when compared to February.
The company, which tracks bankruptcy filings in federal courts, said on a year-to-year basis, bankruptcy filings were about 20 percent higher in March.
Numbers released recently from the Administrative Office of the U.S. Courts showed that bankruptcy filings were up almost 32 percent during 2009. In all, more than 1.47 million filings were recorded by that office, compared to the more than 1.12 seen in 2008.
AOUSC noted in its report that bankruptcy filings have grown at a steady pace since the government passed new regulations through the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. This is despite the fact the new rules should have made it more difficult for consumers to file for bankruptcy by placing stricter standards and requirements.
For example, the act made it so that more people would have to file for Chapter 13 protection rather than Chapter 7. Consumers also have to take credit counseling courses en route to their bankruptcy declaration.
While more people turn to bankruptcy to find a way out of debt, they do so at the risk of ruining their credit history. A bankruptcy can stay on a person's credit report for 10 years, while FICO has reported that a person with a credit score of 680 can expect it to drop between 130 and 150 points as the result of filing.
