American consumers, businesses filing for bankruptcy up 29 per cent y-o-y

New York: The number of US consumers filing for bankruptcy is up 29 per cent in February from the previous year and the numbers are expected to rise with worsening economic conditions, according to the American Bankruptcy Institute (ABI).

According to the ABI, some 98,344 consumers filed for bankruptcy protection in February, which represents the most bankruptcies filed in the month of February since new bankruptcy laws went into effect in 2005.

"We expect at least 1.4 million bankruptcies this year," said ABI executive director Samuel Gerdano, in a statement.

ABI compiles data from the National Bankruptcy Research Center.

According to Gerdano the number will be even higher if Congress changes laws that would permit residential home mortgages to be modified under Chapter 13 of the Bankruptcy Code. Chapter 13 allows people to pay off their debt under a plan in which creditors are paid in whole or in part.

As job losses increase, consumer confidence weakens and home values decline, companies and individuals alike are being pushed into bankruptcy.

A report by law firm Jones Day said that 136 publicly traded US companies filed for bankruptcy last year, which was up 74 per cent from the year ago.

"Yet another surge in corporate bankruptcies is likely, as companies across all sectors react to the global economic crisis," Jones Day said.

IntraLinks, which provides bankruptcy data over the Internet, said in a release Tuesday it had seen a 180 per cent jump in bankruptcy and reorganization deals for the three-month period ended 15 February over the same period last year.