Insolvency record requests reach 1.5 million
Declarations of bankruptcy have increased by 19% to a record 1.5 million last year, as businesses and consumers struggle under high debt loads during the economic slowdown.
The consumer bankruptcies, which accounted for 97% of applications has jumped by 19%, while business bankruptcies increased by 13%, according to data released Tuesday by the managing authority of U.S. courts.
But publicly applications for registration of 46% of companies grew to a record 257, the Federal Deposit Insurance Corp. said. Last year, requests for Enron, Pacific Gas & Electric, Reliance Group and Federal-Mogul are among the 20 largest bankruptcies.
Declarations of bankruptcy had a quick start last year, partly because the move to a congress a bill that bankruptcy would have strengthened federal law.
“The draft law was published in the” Fast-Track in the first quarter of the year, and many people have said that the file because it was the last chance after the old law, “said Samuel Gerdano , Executive Director of the American Bankruptcy Institute. As the years went on Bill foundered, and he had less impact on enrolments.
Other factors fueling inscriptions:
Collective redundancies. The economic slowdown generates a stream of corporate downsizings. In addition, many workers, advice and am seen their incomes shrink, “said Stuart Feldstein, president of SMR Research in Hackettstown, NJ and retired, based on interest and investment income has been hammered by low interest rates and a slowdown Exchange.
Debt Pile-Up. “It was a massive consumer debt, Pile-Up in the years 1990,” Gerdano said. “Well, the bill expires. Consumer debt was $ 1.65 trillion euros at the end of 2001, according to provisional data from the Federal Reserve. The average budget to the USA with at least one credit card had $ 8,562 card debt in December 2001, 3% compared to 2000, CardWeb.com reports.
Terrorism. In the wake of the September terrorist attacks, commercial insurance premiums, and in some sectors such as tourism in Las Vegas, have been badly affected.
Fallout bankruptcy. Bankruptcies of companies are often a chain reaction, which is problems for laid-off workers and suppliers, that sparks more bankruptcies.
Critics of the current law say, too many people use bankruptcy to erase the debt they could afford to repay. But others say that the system is mainly families financially umreiften, can not cope with the consequences of job loss, divorce or an unexpected medical event.
“The rise in bankruptcy should not be considered as an indication that any failures must be limited,” says Lawrence Ausubel, an economics professor at the University of Maryland. “We need the bankruptcy of the economic system as a factor of safety valve.”
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