Bankruptcy toll increases
Credit freeze, housing woes blamed for surge
By Becky Yerak
More than 12,500 individuals and businesses filed for bankruptcy in Illinois in the first quarter of this year, a 27.2 percent jump over the year-earlier period that mirrors a national trend.
Consumer filings in the state increased 27.5 percent, to 12,248, while business bankruptcies rose 14.5 percent, to 260.
"The increase in business bankruptcies over the past year reflects the turmoil persisting in the credit markets, which makes it far more difficult for businesses to manage through periods of slowed activity that threaten their liquidity," said Stuart Rozen, partner in the restructuring, bankruptcy and insolvency practice for law firm Mayer Brown LLP in Chicago.
Rapidly rising food and commodity prices have increased the cost of doing business for certain industries, particularly restaurant and food services, trucking, airlines and construction and housing related businesses, he said.
"The increase in consumer filings is generally being driven by the same factors and particularly the rapid declines in the housing markets," he said.
Nationally, the total number of bankruptcies filed in the first quarter rose 26.9 percent, to 245,695, compared with the year-ago period, according to data released Tuesday by the Administrative Office of the U.S. Courts.
"This ninth consecutive quarterly increase in filings since Congress attempted to restrict access to bankruptcy relief demonstrates again the influence of rising household debt," Samuel Gerdano, executive director of American Bankruptcy Institute, said in a statement. The average American adult is carrying $4,246 in revolving debt and the average American household is carrying $8,218 in revolving debt, according to a study released Tuesday by IndexCreditCards.com, which analyzed government debt and census data. Revolving debt is mainly debt from credit cards.
That's a 19 percent and 13 percent increase, respectively, over the averages calculated by the credit card watcher in January 2006.
Nationally, consumer filings increased 26.5 percent, to 236,982, for the three-month period ended March 31, from the year-earlier period.
Business filings for the three months ended March 31 totaled 8,713, a 38.7 percent increase over the first quarter of 2007.