STATEMENT: Bush’s Bankruptcy Legacy – Three Years and Nearly 1.5 Million Bankruptcy Filings Later
Washington, D.C. – On the eve of the three-year anniversary of president Bush’s controversial bankruptcy bill becoming law, data show that in the last two years nearly 1.5 million individuals filed for personal bankruptcy. The new data further questions the merits of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.
Supporters of the bill in 2005 (including President Bush) argued that BAPCPA would significantly decrease the number of bankruptcy filings by eliminating those who were declaring “bankruptcies of convenience.” Opponents asserted that BAPCPA would only lower the number of bankruptcy filers in the short term as the increased costs and complexity of filing for bankruptcy under the new law would cause financially struggling families to delay filing.
The opponents of the bill proved to be prescient. After a sharp increase in the number of bankruptcy filings leading up to October 17, 2005 (the date the new law took effect), followed by a dramatic drop immediately following this deadline, filing rates have continued to climb. And if data since enactment of BAPCPA is any guide, including numbers released earlier this week by the U.S. Courts, subsequent releases in 2008 and beyond, will likely highlight the continuance of this upward trend.
The numbers are stark: By the end of the fourth quarter of 2007, the national Chapter 7 bankruptcy rate had reached 1.7 filings per 1,000 people, which is a 95.8 percent increase from the 0.9 filings per 1,000 people at the end of the first quarter of 2006, the first complete quarter after BAPCPA took effect. Similarly, the national Chapter 13 bankruptcy rate stood at 1.1 filings per 1,000 people in the fourth quarter of 2007, a 62.2 percent increase from 0.7 filings per 1,000 people in the first quarter of 2006.
READ THE FULL REPORT: http://americanprogress.org/issues/2008/04/bankruptcy_column.html