Personal Bankruptcy Filings Soar in Connecticut
As job losses and salary cuts continue to squeeze household budgets already burdened by increased credit card debt, personal bankruptcy filings in Connecticut skyrocketed 44% in the 3rd quarter of 2009 as compared to the same time in 2008 according to a report from The Warren Group.
There were 2,569 personal bankruptcy filings for the three months ending September 30, compared to 1,773 filings in the same period in 2008, according to an article from the Hartford, Connecticut, newspaper, Courant.com. Quoted in this article was Donald L. Klepper-Smith, an economist at New Haven’s DataCore Partners Inc. He states, “It all boils down to consumers that are stretched too thin. It's the basic lack of income in an economic downturn."
Some economists feel that Connecticut will lose 80,000 to 100,000 jobs as a result of the current recession. Experts also say that job relief will most likely be slow and cautious, not occurring in time for those facing personal bankruptcy.
In Connecticut and across the country, Chapter 7 filings spiked in 2005, before a new federal law went into effect making it more difficult and expensive for consumers to file for this court-supervised protection. Chapter 7 bankruptcy filings, which wipe out all debt except mortgage debt, totaled 2,275 in the third quarter, compared with 1,384 a year ago, a 64 % jump. Chapter 13 filings, which require a repayment plan, fell by 24 percent, to 294 in the recent quarter, from 389 in the same period in 2008.
This same article quotes Joel Grafstein, a bankruptcy attorney from Farmington, Connecticut. He states that the shift to Chapter 7 filing is probably an attempt for consumers to keep their homes.
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