More consumers choosing bankruptcy to relieve credit card debt
Though most experts would agree that bankruptcy should be an absolute last resort for consumers looking to get out from under their credit card debt, more Americans opted to follow that course in July.
According to the latest report from the National Bankruptcy Research Center, 139,000 consumers filed for bankruptcy in July, up from 127,000 in June. The vast majority of those filings – 75 percent – were under Chapter 7, which allows consumers to eliminate their debt, and is favored by those who are drowning in credit card bills. The other 25 percent opted to filed for Chapter 13, under which a court-appointed trustee sets up a payment plan that will allow a consumer to pay off what they owe over time.
The NBRC also said the number of filings was up considerably from 2009, as July bankruptcies rose 9 percent from the same month last year. The total for all of 2010 is about 13 percent higher than the first seven months of 2009.
A report from the American Bankruptcy Institute said that debt, along with the continued high levels of unemployment and the uncertain economy, have all contributed to the increases in bankruptcy this year.