Orange County residents and businesses filed 3,905 bankruptcies in the first six months of the year, almost doubling the number in the same period of 2007, according to the federal Bankruptcy Court Central District of California, based on filings in the Santa Ana court.
It was the highest six-month total for the county since the bankruptcy law changed Oct. 15, 2005. Although the economy was strong at that time, many people and businesses in financial trouble rushed to file under the old, more lenient rules.
Here are Orange County business and personal bankruptcies for the past five years (*indicates the first full year of the new bankruptcy law that makes it more difficult to discharge all debts):
Orange County continues to feel the impact of job losses — the unemployment rate is now 5.7%, the highest in 13 years — the real estate and financial industry woes, rising prices for food and fuel — inflation was up 5.6% through June — and the subprime mortgage crisis.
Local bankruptcies actually accelerated in June. The 755 filings were up 112.7% from June 2007 and 2.4% higher from May.
That trend does not bode well for the remainder of the year. Mike Bickford, chief manager of AACER (Automated Access to Court Electronic Records) notes, “In the past we have seen (bankruptcies) stay fairly level in the summer and then spike in the fall.”
Nationally, more than half a million bankruptcies were filed January through June. While business bankruptcies represent only about 10% of all filings, they have hit a wide range of industries, not just construction, real estate and mortgages.
The American Bankruptcy Institute expects more than a million consumer bankruptcies in 2008 as families struggle with mounting debt and higher prices.
