A 'perfect storm' sends filings up to highest level since '05 reform

Everyone from retirees who can't afford to live on Social Security, to baby boomers who were downsized, to college graduates who can't find work, to homeowners who drained the equity from their homes helped push 2009 personal bankruptcy filings up by nearly one-third over the previous year.

Chapter 11 bankruptcy filings by U.S. businesses surged 50 percent last year, outpacing the increase for individuals.

The number of businesses filing for bankruptcy in 2009 increased 38% over the prior year, providing a measuring stick of the widespread economic crisis that likely will continue to put pressure on companies in 2010.

Yield-hungry investors have driven a robust rally in junk bonds this year, allowing many weak companies to avoid or postpone appearances in bankruptcy court by refinanc- ing their debt at attractive rates.

"Bankruptcies lag the economy, and you won't see any effects of a better economy for at least six months, and perhaps 12 to 18 months," he said. "Bankruptcies are a last resort for many people, and you're seeing filings now that typically arise from problems six to 12 months ago."