For all the talk of recovery of the United States economy, there is one boom market that's running out of control. It's the market for bankruptcies.
Reuters reports that bankruptcies in the US have now risen to their highest level since 2005. According to Reuters, 158,141 U.S. bankruptcy petitions, covering consumers and businesses, were filed in March, up 20% from 132,005 last March and 35% from February's 117,240. A report from court filings and released by Automated Access to Court Electronic Records shows that filings in March were 19% greater than the 133,393 recorded in October 2009. There were 1.47 million bankruptcy filings, the most since a record 2.08 million were filed in 2005. Filings for individuals rose 32% to 1.41 million, and for businesses was up 40% to nearly 61,000.
As Time Magazine says, it's likely to get worse because Americans have been living beyond their means for many years. Personal borrowings in the U.S. are 10 times greater than they were in 1960. That's why the fastest growing type of bankruptcy is the Chapter 7 model that allows a debtor to wipe out his or her debts entirely and get a fresh start. This suggests many are walking away from their mortgages, rather than attempting to make payments. During a recession with record-high long-term unemployment, it seems the easiest thing to do.
With the real level of unemployment in the US rising to 17% – if you include those who are neither working nor looking for work, but say they want a job and have looked for work recently and includes part time workers who took part time work because they couldn't find full time jobs – it means one thing.
"Fewer people are trying to save their homes," Katherine M. Porter, a University of Iowa law professor and bankruptcy expert told the New York Times.
Just another sign that the recovery will take some time to materialize.
no comment untill now