Bankruptcy filings in the U.S. surged 37 percent in February from a year earlier, with more Americans seeking protection from their creditors as the economy sank into its deepest recession in at least a quarter century.Total filings for individuals and companies rose to more than 103,000, according to data compiled by Automated Access to Court Electronic Records, a service of Jupiter ESources LLC in Oklahoma City. Commercial filings rose to 6,303, up 47 percent from the same month a year earlier, the group said.
“It’s not surprising that more people are declaring bankruptcy as the U.S. is going through one of the deepest recessions since the 1930s,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. “A lot of people are losing their homes, their jobs and their wealth.”
The spike in filings comes as 3.6 million Americans have lost their jobs since the recession began in December 2007 and foreclosures last year rose to an annual record. President Barack Obama last month signed a stimulus package and proposed a record budget for 2010 to jumpstart the economy and put it on a path of sustained growth.
Faltering consumer demand has precipitated recent Chapter 11 filings by retailers such as Everything But Water LLC, the largest U.S. retailer of women’s swimwear, and Ritz Camera Centers Inc., the largest chain of camera stores.
A pullback in newspaper advertising brought on filings in late February by the parent of the Philadelphia Inquirer and by Journal Register Co. and its 20 daily newspapers and 159 non- daily publications.
General Motors
Car sales running at the weakest pace in more than a quarter century are threatening the future viability of auto maker General Motors Corp., which is seeking $16.6 billion in new federal loans, on top of $13.4 billion already granted, to keep operating while it restructures its operations.
“The threat is still there,” GM Chief Executive Officer Rick Wagoner said of the possibility of bankruptcy in a Bloomberg Television interview Feb. 18. “Our assumption is that we can get this done out of court and it’s better for everybody.”
The increase in bankruptcy filings cut across all regions, said Mike Bickford, president of AACER, a bankruptcy data and management service. All but 12 states had double-digit increases in filings in February from the prior month, said Bickford.
The states with the highest per capita bankruptcy filings were Tennessee, Nevada, Georgia, Alabama, and Michigan. The states with the fastest growing bankruptcy filings were Hawaii, Delaware, and Washington, according to AACER statistics.
Almost 1.1 million Americans filed for bankruptcy in 2008, 32 percent more than the 827,000 filed in 2007 and up 86 percent from the 590,500 filings in 2006.
Bankruptcy filings still lag behind the all-time record set in 2005 of 2.1 million, when 630,000 Americans sought bankruptcy refuge in the two weeks before revisions to federal bankruptcy laws in October made it more difficult for individuals to erase debts.
