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More Americans File for Bankruptcy

Bankruptcy judges have seen a 59 percent increase in caseloads in the past decade, and no new judges have been added to the federal bench since 1992, according to the Washington Post.

“The number of bankruptcy filings in the federal courts in Fiscal Year 2002 broke records again, and with no new bankruptcy judgeships and funding frozen, the Judiciary is struggling to handle the caseload,” the court’s Web site reported. “According to the Administrative Office of the U.S. Courts, more bankruptcies were filed in the 12-month period ending September 30, 2002 than at any time in history.” <?xml:namespace prefix = o ns = “urn:schemas-microsoft-com:office:office” />
Bankruptcy judges have seen a 59 percent increase in caseloads in the past decade, and no new judges have been added to the federal bench since 1992, according to the Washington Post.
“I am a little surprised,” Samuel J. Gerdano, executive director of the American Bankruptcy Institute, told the Post. “Last year we had a 10 percent drop between the end of June and the end of September. This reflects that the debt of the ’90s is hanging over us. Consumer debt is very high, and families are under a lot of stress.”
Gerdano said that as long as consumer spending remains high and personal savings remain low, more bankruptcies can be expected.
Some consumerists “blame credit card issuers for seducing consumers into debt with credit offers,” according to ConsumerAlert.com. “Experts cite other factors to explain bankruptcy trends, such as large uninsured medical expenses, divorce with its financial pressures on a divided family, family crises, business failure, higher unemployment in certain regions, as well as credit over-extension.”
ConsumerAlert.com listed the following warning signs that an individual may be headed for financial trouble:

  • Not paying bills on time, or juggling bill-paying each month.
  • Making only minimum payments on large credit card bills.
  • Not knowing how much you owe.
  • Living up to two incomes, without putting anything aside for emergencies.
  • Regularly using your overdraft credit on your checking account to pay bills.
  • Getting calls from collection agencies.
  • Being denied credit because of a negative credit report.

So how does one get back on track? ConsumerAlert.com suggests these steps:

  • Analyze where your money is going by establishing a budget and sticking to it.
  • Contact your creditors if you are facing temporary problems in making your payments. Try to work out a repayment schedule that you can meet.
  • If you have many credit accounts on which you are behind, consider a consolidation loan; but be sure you can make the loan payments.
  • If the problem is severe or long-term, contact your local non-profit Consumer Credit Counseling Service, to help you get control of your financial situation.
  • In considering whether to file for bankruptcy, first seek competent legal advice. Because of its legal and financial consequences, bankruptcy should only be considered in extreme situations. Be aware that there are fees associated with filing, and you must still pay some of your debts.

The Post reported that the latest jump in the number of bankruptcies “will give more fuel to credit card firms and financial institutions that have been pressing to change the nation’s bankruptcy laws to make it more difficult for debtors to file for bankruptcy and wipe out their debts.”
Such legislation has been in the works for a decade now, but still hasn’t garnered the necessary votes, according to the Post.
Jodi Mathews is BCE’s communications director.