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Tuesday, February 19, 2002; 7:24 PM
WASHINGTON –– Bankruptcy filings by American consumers and businesses jumped 19 percent in 2001, hitting a record high of 1,492,129 in a year in which the economy slid into recession, according to data released Tuesday.
The filings last year compared with 1,253,444 new bankruptcies filed in 2000 and the previous record of 1,442,549 cases filed in 1998, data compiled by the Administrative Office of the U.S. Courts show.
Samuel Gerdano, executive director of the American Bankruptcy Institute, a group of bankruptcy judges, lawyers and experts, called 2001 "a boom year for bankruptcies."
"The combination of record levels of consumer debt and an economic downturn beginning in 2000 caused more families to face financial stress than ever before," he said.
It wasn't immediately known how many of the bankruptcy filings came after the Sept. 11 terror attacks in New York and Washington.
The number of new bankruptcies filed in the fourth quarter, from Oct. 1 through Dec. 31, was 364,921, up 18 percent over the same period in 2000 and the highest fourth quarter ever.
The U.S. economy officially was declared in late November to be in a recession.
The majority of filings continued to be under Chapter 7 of the U.S. Bankruptcy Code, which allows people to dissolve their credit-card and other debts. Chapter 7 filings were 1,054,975, up 23 percent from 859,220 in 2000.
In return for having their debts erased, people in Chapter 7 cases often turn their property over to a bankruptcy trustee, except for basic necessities such as a car, clothing and work tools. Property with value is sold to pay creditors. Debtors generally are allowed to keep some personal items and possibly some of the equity in their home, depending on state laws.
The House and Senate last year approved sweeping legislation to overhaul the bankruptcy laws to make it harder to file under Chapter 7. President Bush has signaled he would sign such legislation, but final passage has been stalled.
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On the Net:
Administrative Office of the U.S. Courts: http://www.uscourts.gov
American Bankruptcy Institute: http://www.abiworld.org
THE END
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