According to an article in USA Today, the number of bankruptcy filings since January have reached 954,911, a significant increase from 703,732 in the same period in 2008. The article said: “In August, filings were up 22% compared with August 2008… The housing crisis has caused much of the recent financial distress.” The rising number of foreclosures and the rising number of job losses have conspired to send the number of bankruptcies soaring. Already, we’ve seen a 22 percent increase in bankruptcy filings since August 2008 and many analysts predict that the number of bankruptcies will only increase. Some bankruptcy experts are forecasting 1.45 million bankruptcy filings in 2009. That would mean that bankruptcy filings could reach pre-2005 numbers this year. In 2005, the bankruptcy code was modified making it more difficult for debtors to file Chapter 7 bankruptcy . The bankruptcy reform was intended to discourage abuse and ultimately decrease the number of bankruptcy filings. And although bankruptcy filings decreased initially after the 2005 changes, bankruptcy filings are now increasing rapidly as the economy worsens. The problem is that with or without the changes to the bankruptcy code, the underlining problems that cause bankruptcy remain. People are still losing their jobs, losing their homes to foreclosure and going without medical insurance which is a recipe for accumulating massive medical debt . People in these scenarios need the protection of bankruptcy and the increase of filings in this crisis is a reminder of that fact.
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