Job losses, housing market driving more bankruptcies

Job losses and the disastrous housing market continue to drive more and more people into bankruptcy court.

Bankruptcy filings rose to 6,000 per day and are expected to increase to 1.5 million this year, up from 1.1 million in 2008, according to a report from Automated Access to Court Electronic Records in USA Today.

When the new bankruptcy law was passed in 2005, 2 million people rushed into bankruptcy before the law took effect, sending bankruptcy filings dropped drastically. Now they're almost back to what they were because, as many consumer advocates expected, bankruptcy was not the purview of the wealthy deadbeats, but is truly the last refuge for those in serious financial trouble who need a way to get a fresh financial start.

"People are contacting us too late to get help. They are in such trouble that we can't help them. They are just candidates for bankruptcy," David Jones, president of the Association of Independent Consumer Credit Counseling Agencies, told me in a telephone interview.

The agencies affiliated with the AICCCA used to be able to help 20-25% of the people who came to them to avoid bankruptcy. Now they find they can only help about 7-8%, Jones explained.