SOURCE: Think Debt Relief

Think Debt Relief

February 26, 2009 08:55 ET

Personal Bankruptcies Soar as Recession Takes Its Toll

Think Debt Relief Sees More Consumers Seeking Debt Help

PHOENIX, AZ--(Marketwire - February 26, 2009) - Personal bankruptcies jumped by nearly one-third in 2008 as 1.06 million consumers filed for protection, and the rise in filings is expected to continue as housing values plummet and consumer debts climb, says the American Bankruptcy Institute. This increase comes after the 40-percent upsurge in bankruptcy filings in 2007.

"This underscores that the underlying economic problems of consumers who are facing high debts, flat incomes, and now declining home values are a very powerful force that pushes people over the edge," says Samuel Gerdano, executive director of the ABI.

Amidst the current housing and unemployment crisis, more consumers, unable to keep up with their mortgage payments and crushing credit card debt, are turning to credit card debt relief and loan modification programs, and as a last resort, bankruptcy.

The New York Times reports that in 2007, on average, those who filed for bankruptcy had a 21-percent increase in secured debt -- debts tied to some form of collateral, such as home and car loans -- than those who filed in 2001, and 44 percent more in unsecured debts like medical bills and credit cards. Many homeowners are maxing out credit cards as they struggle to remain current on their mortgage and other monthly bills.

Some of the states with the highest levels of bankruptcy filings, Florida, Nevada, and California, are also among those states hardest hit by the real-estate crash and skyrocketing foreclosures. In California, bankruptcy filings in October were up 80 percent over last year; in Florida, 62 percent; and in Nevada, the state with the highest number of foreclosures in the nation, filings surged by 70 percent.

States where unemployment rates have been climbing -- Rhode Island, Indiana, and Delaware, in particular -- have also seen a sharp increase in bankruptcy filings.

"We expect the numbers will continue to go up," Gerdano says. "It's the aftermath of the debt overhang that many households are facing, plus an inability to tap into home equity, which traditionally helped buttress home finances."

About Think Debt Relief

Think Debt Relief, www.ThinkDebtRelief.com, is an experienced debt relief company dedicated to helping consumers get out of debt without having to declare bankruptcy. Think Debt Relief offers debt settlement, credit counseling, and loan modification services.