More Americans filed bankruptcy in October than in any month since changes to U.S. bankruptcy laws in 2005 as unemployment and falling home prices prevented consumers from paying their debts.
The number of individuals filing bankruptcy rose 25 percent to about 131,200 from a year earlier, according to data compiled from court records by Oklahoma City-based Jupiter ESources. The 1.2 million bankruptcies filed this year through October have already surpassed last year’s total of 1.1 million.
In Colorado, the U.S. Bankruptcy Court received 2,605 new cases in October, said court clerk Brad Bolton.
That’s below the 2,741 filings seen in July but a 31 percent jump from the 2,095 cases filed in October 2008. The July and October totals are the highest in Colorado since October 2005, when 14,725 bankruptcy filings flooded in.
Businesses also continued to struggle to pay creditors; corporate bankruptcies nationwide climbed about 30 percent from October 2008, according to Jupiter.
Chapter 11 bankruptcies, where a company attempts to reorganize rather than liquidate, rose the most in four months to 1,327 in October, according to Jupiter.
In Colorado, there were 33 Chapter 11 filings in October, the highest monthly total in records going back a decade. By comparison, there were 74 Chapter 11 filings in Colorado for all of 2007.
“Despite the recovery, several sectors remain in crisis,” Kurt Carlson, a bankruptcy lawyer at Chicago-based Much Shelist Denenberg Ament & Rubenstein PC, said in an e-mail. “The real estate markets haven’t improved. Vacancy rates continue to climb. Those in manufacturing are cutting costs.”
The American Bankruptcy Institute estimates personal filings will reach 1.4 million by the end of the year. That would still be fewer than the record 2.1 million bankruptcies in 2005.
Denver Post staff writer Aldo Svaldi contributed to this report.
