The country's economic difficulties took an acute toll onindividuals and businesses last year as the number of filings forbankruptcy rose by 31.9%, according to data released last week bythe Administrative Office of the U.S. Courts.

There were 1.4 million bankruptcy filings in 2009, compared with1.1 million in 2008, a 32% increase in nonbusiness filings. Lastyear, there were also and 60,837 business filings, a 40% increasefrom 2008.

According to data compiled by the NCUA, 324,028 members offederally insured credit unions filed for bankruptcy in 2009, a42.2% increase over the 227,852 members who made such filings in2008. Most of the filings were under Chapter 7, which saw a 48.6%increase over 2008.

In 2009, there was a 63.1% increase in the size of outstandingloans subject to bankruptcy and a 60.1% increase in the value ofloans charged off due to bankruptcy.

Last year, 20.76% of all loans charged off were the result ofbankruptcies, a 9.9% increase over the 18.9% rate in 2008.

Overall, the vast majority of bankruptcy filings-1.1million-were Chapter 7, compared with 744,364 in 2008. There were406,962 Chapter 13 filings last year, compared with 362,705 in2008. In 2009, there were 15,189 Chapter 11 filings, compared with10,160 in 2008. There were 544 Chapter 12 filings in 2009, up from345 in 2008.

And despite the improved economy, bankruptcy filings arecontinuing to increase. The American Bankruptcy Institute reportedthat in February consumer bankruptcies rose 9% over their Januarylevel and were 14% higher than in February 2009.

There were 111,693 consumer bankruptcies last month, accordingto the institute, which projects that there will be more than 1.5million bankruptcy filings in 2010.

“While Congress and the Obama administration continue toconsider measures to reduce high unemployment and mortgage burdens,families with increasing debt loads have little choice but tocontinue to turn to bankruptcy for financial relief,” ABI ExecutiveDirector Samuel J. Gerdano said in a statement.

If the institute's prediction proves correct, it would be thehighest number of bankruptcies since 2005, the year before the mostrecent overhaul in bankruptcy law took effect. In 2005, there were1.6 million bankruptcy filings.

During the debate over that law, which CUNA and NAFCU backed,CUNA said that bankruptcy accounted for $90 million, or 40% of allcredit union losses each year.

The law tightened eligibility requirements for Chapter 7filings, which erases most debts, pushed more consumers into filingunder Chapter 13, which establishes a creditor repayment plan.

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