Wednesday, August 18, 2010

US bankruptcies top 400k

NEW YORK - US BANKRUPTCY filings have reached the highest level since 2005, government data released on Tuesday show, as the economy slows and the unemployment rate hovers just below double digits.

There were 422,061 bankruptcy filings between April and June, according to the Administrative Office of the US courts, up 9 per cent from 388,148 in the prior three-month period, and up 11 per cent from 381,073 a year earlier.

For the year ended June 30, there were 1.57 million bankruptcies, up 20 per cent from 1.31 million a year earlier. Consumer bankruptcies rose 21 per cent to 1.51 million, and business bankruptcies rose 9 per cent to 59,608.

Quarterly filings surpassed 400,000 for the first time since a record 667,431 bankruptcies were begun in the fourth quarter of 2005, when Congress overhauled federal bankruptcy laws and made it harder for people and businesses to file.

'We know the causes of bankruptcy are principally job losses and health care, with the overlay of the foreclosure crisis,' said Deborah Thorne, an associate professor of sociology at Ohio University. 'It feels very unsettled, and I'm not surprised the numbers are going up. Until we get our feet on the ground, provide decent-paying jobs, and do something with the housing crisis, bankruptcies will continue to go up'.

Last Tuesday, the US Federal Reserve said high unemployment, reflected in July's 9.5 per cent rate, as well as modest income growth, falling home prices and tight credit amid a contraction in bank lending were factors contributing to a slowdown in economic growth. -- REUTERS

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