Businesses and individuals are crumbling under economic woes and more and more are declaring bankruptcy as the recession whittles away at people’s wallets.
Three years ago, the federal government made it much tougher for Americans to escape their debts, an Associated Press analysis found, but tough times seem to have pushed the country past those stricter guidelines.
Connecticut falls right in the middle with a 42 percent increase in bankruptcies between March 2008 and March 2009.
"There's no end in sight," bankruptcy lawyer Bryan Elliott of Hickory, N.C., said. As bankruptcies rise, he gets busier. He is working seven days a week and scheduling prospective clients a month in advance. "To be doing this well and having this much business, it is depressing. It's not a laugh-a-minute job."
Nearly 1.2 million down-on-their-luck Americans filed for bankruptcy in the past year, according to federal court records collected and analyzed by the AP.
Last month, 130,831 sought bankruptcy protection -- an increase of 46 percent over March 2008 and 81 percent over the same month in 2007.
Connecticut ranks 26 in the country, with 971 bankruptcy filings in March 2009, up from 684 in March 2008.
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Bob Lawless, a professor at the University of Illinois College of Law, said bankruptcies could reach 1.5 million this year and level off at 1.6 million next year -- around the same time economists expect an economic recovery to begin.
If it reaches 1.6 million, it will be getting closer to the sky-high limits that prompted Congress in 2005 to make bankruptcy more cumbersome.
After tighter requirements were instituted, bankruptcies plummeting from a record-shattering 2 million cases in 2005 -- a total that reflected a rush to file before the new law took effect -- to 600,000 in 2006.
In the past 12 months, about four people or businesses for every 1,000 people in the country filed for bankruptcy, according to the AP analysis. Previous recessions also drove people to bankruptcy court, though those increases were more moderate.
Bankruptcy is considered a lagging economic indicator, since it is generally a last resort. The economic meltdown, according to the AP, has hit hardest in Delaware, Arizona, Idaho, California and Nevada.
