U.S. Bankruptcy filings surged last month, as the housing market turmoil that has recently spooked Wall Street also played out in federal bankruptcy court. July filings are up 38% over filings from the same month in 2006.

Total bankruptcy cases for the first seven months of this year are already 50% higher than they were this time last year, according to data from Jupiter eSources LLC, which operates Automated Access to Court Electronic Records, a bankruptcy research firm.

Further Increase Expected In 2008

Chapter 11 filings jumped by nearly 25% in 2007,hitting the highest levels since Congress enacted laws in 2005 designed in part to discourage bankruptcy filings.

Those filings, which mostly involve business restructurings, rose to 6,236, up from 5,010 in 2006, according to data compiled by Oklahoma-based Automated Access to Court Electronic Records. AACER is a private company that tracks bankruptcy statistics.

Bankruptcy filings began climbing last year, as the housing crisis and rising consumer debt began to take their toll.

Crystal Erickson and her sons Mun Luak, 1, and Ramkel Luak, 3, in Portland, Me. She and her fiancé face foreclosure on their home and are considering bankruptcy.

Filings plummeted in 2006 after reaching unusual heights in 2005, when consumers rushed to declare bankruptcy before a tough new law took effect that October. Total filings of both consumer and business bankruptcies last year were still far below what they were in 2004, the last “normal” year.

U.S. residents filed for bankruptcy last month at a daily pace lower than the fourth quarter of 2007 and at the slowest monthly rate since August, while company filings jumped in January.

More than 70,000 personal bankruptcy petitions were filed last month, according to data compiled by Jupiter eSources LLC. At that rate, 2008 would witness only a 2 percent increase over the 827,000 petitions filed in 2007.

Generous credit conditions and low defaults in thefirst nine months of 2007 helped business bank-ruptcy drop 5% over the 2006 fiscal year, but experts say filings are likely to rise dramatically in 2008.

The Administrative Office of the U.S. Courts said25,925 businesses sought bankruptcy protection in the fiscal year ended Sept. 30, 2007, down from 27,333 in the2006 fiscal year.