Personal Bankruptcies Reach Record High in 2005

In both the United States and Canada, 2005 was a record year for personal bankruptcies.

According to the U. S. Courts Bankruptcy Statistics webpage, the number of Americans filing for personal bankruptcy jumped 30 percent in 2005 to the highest level in history. New U.S. personal bankruptcy laws took effect on October 17, 2005, causing a large increase in Chapter 7 personal bankruptcy filings before the new more restrictive rules became law.

Although no new Canadian laws came into effect in 2005, the number of personal insolvencies exceeded the 100,000 level for the first time in 2005.

As debt levels continue to increase, it is expected that personal bankruptcy rates will continue to increase in the future.

Is it Wrong to File Personal Bankruptcy?

This is a common question. You know you owe the money, and you feel guilty that if you go bankrupt you are hurting your creditors.

If you have committed fraud by deliberately running up your credit cards when you knew you couldn't pay them, then yes, that is fraud, and that is wrong.

Most people, however, intended to repay their debts, but then they lost their job, got divorced, or had a medical condition that prevented them from working, and they got behind on their bills. Once your wages are garnisheed, for many personal bankruptcy may be the only option.

Before you make the final decision, consider all of your bankruptcy alternatives so that you are making an informed decision.