Why US Bankruptcies Have Reached a 5-Year High

Wednesday, January 05, 2011

America saw 1.53 million personal bankruptcy filings in 2010: a five-year high. The last time bankruptcies happened so frequently was in 2004, when consumers were trying to preempt strict laws that would steer them away from the financial option last resort. Why is the 2005 law failing to slow the rate of bankruptcies?

Maureen Thompson is legislative director of the National Association of Consumer Bankruptcy Attorneys. She says that the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was built on a faulty premise that could never really prevent Americans in dire need: Americans like Takeaway listener Amy Collins, a single mother of two who filed for bankruptcy in June.

 

Guests:

Amy Collins and Maureen Thompson

Produced by:

Hsi-Chang Lin

Comments [7]

Brian O'Connor from Detroit, Mich.

I am a reporter for The Detroit News doing a story on personal bankruptcy. I would love to hear from any Detroit-area listeners who can share their bankruptcy experience and advise others struggling about whether they should file for bankruptcy.
boconnor@detnews.com

Jan. 05 2011 12:56 PM
Pamela from Oak Park,MI

My husband and I filed for bankruptcy because BOA foreclosed on our house while we were applying for a loan modification. Our house was under water. We filed to protect ourselves from being sued by BOA. We were advised, uofficially, to get three months behind on our payments in order to qualify for a loan mod. We did everything BOA told us to do and they still foreclosed. We did not want to file, but had no choice.

Jan. 05 2011 09:55 AM
James from Detroit

Thank you for this excellent perspective that exactly describes both my situation and the mental toll that bankruptcy has on an individual.

Sincerely,

Filing in Detroit

Jan. 05 2011 09:50 AM
James from Detroit

Thank you for this excellent perspective that exactly describes both my situation and the mental toll that bankruptcy has on an individual.

Sincerely,

Filing in Detroit

Jan. 05 2011 09:44 AM
linda from detroit

Bankruptcy is a tool. Businesses use it everyday. Families, individuals, are businesses. Why shouldn't we take advantage of the protections? It is not as stigmatizing as it used to be and should not be. It is a way of eliminating bad unsustainable debt. I don't think the credit reports should take as big as a hit as it does or for as long. Businesses are not.

Jan. 05 2011 09:42 AM
Jeffrey Peltz from Brooklyn, New York

Thank you for this excellent story. It does a good job of presenting the situation of the average person facing bankruptcy.

I am a member of the National Association of Consumber Bankruptcy Attornenies. It's members are dedicated to helping consumers.

I have helped thousands of people get a fresh start by filing banktupcy over the last 25 years and I can confirm that the vast majority of people do not wish to wish to file banktupcy. By the time they come to my office they have tried everything they can to avoid bankruptcy. They have borrowed form their 401K, friends, family, taken the equity out of their home and continued to pay creditors long after they should have stopped and filed bankruptcy. Also, because many people wish, at all costs, to avoid filing bankruptcy, they fall victim to companies that advertise in the media that they can help them. In fact most of those companies only help themselves to the consumers precious last dollars.

Jan. 05 2011 09:07 AM
Raymond from New York

US bankruptcies have reached a 5 year high but December car sales are at their strongest pace in 5 years. These two articles are side by side in the NY Post financial page.

I infer the Wall Street fat cats are spending while the main street slobs are fliing for bankruptcies.

Jan. 05 2011 08:35 AM

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