Americans filed for bankruptcy in growing numbers in February, buckling under the combined weight of rising energy prices, a weakening housing market and sky-high personal debts.
An average of 3,960 bankruptcy petitions were filed per day nationwide last month, up 18 percent from January and up 28 percent from a year earlier, according to Automated Access to Court Electronic Records, a bankruptcy data and management company.
February was the busiest month for filings since Congress overhauled the bankruptcy law in 2005. Bankruptcy experts said the rise was particularly worrisome because those changes made filing for bankruptcy more complicated and expensive.
"This number of bankruptcies may be under-representative of the true financial distress consumers are feeling because of the steps Congress has taken," said Jack Williams, a scholar in residence at the American Bankruptcy Institute and a professor at Georgia State University.
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Read about how the bankruptcy code could change again. As the Politico.com reports:
Supporters of the measure, which would allow bankruptcy judges to modify the terms of certain adjustable-rate mortgages, suffered a stinging defeat last week, falling far short of the 60 votes needed for the Senate to take up the housing bill containing the championed provision.
Lobbyists pushing the bankruptcy change believe some fence-sitting lawmakers will, in time, hop off and come over to their side.
That's because the pro-bankruptcy-change camp expects conditions in the housing market to get increasingly grim. And they're betting that the worsening situation will ramp up pressure on lawmakers to do something beyond the voluntary workouts, such as loan modifications or repayment plans, which consumer advocates argue aren't helping enough homeowners.