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A deep economic problems are pushing a growing number of consumers already struggling in bankruptcy, often with more debt than those who filed in previous downturns.
Plummeting home values, dwindling revenues and the near disappearance of credit have proved a powerful mixture. While all the usual reasons distressed debtors seeking bankruptcy - the loss of jobs, medical bills, divorce - play important roles, new economic forces are changing the calculation that can walk the hard times that can not.
The number of personal bankruptcy filings jumped almost 8 percent in October from September, after marching steadily upward over the past two years, said Mike Bickford, president of Automated Access to Court Electronic Records, a bankruptcy data and management company.
Filings totaled 108,595, surpassing 100,000 for the first time since a law that made it more difficult - and often twice as expensive - to file for bankruptcy in 2005, took effect. That translated into an average of 4936 business bankruptcies filed each day last month, up nearly 34 percent of October 2007.

Robert M. Lawless, a professor at the University of Illinois College of Law, pointed out to Improve credit by banks as a significant factor in the increase in October. As banks have pulled back on lending, he said, consumers were finding it more difficult, and in many cases impossible, to use credit cards, mortgages Refinance their home or withdraw from their home lines capital, to get them through a difficult period.

“A credit crunch can lead people into bankruptcy today, rather than later, as sources of credit dried up,” said Professor Lawless. “With consumer credit and to strengthen into a nosedive of the economy, this pop may be just the beginning of a long-term, in determining the rate of bankruptcy filing at levels that are even greater than we had before 2005 bankruptcy law. ”

Not only that the filings are up, but recent filers have more credit card debt, often run by trying to keep current on a mortgage which now exceeds the value of their home, said the bankruptcy lawyers interviews.

A recent study found that the typical family has filed for bankruptcy in 2007 was approximately 21 percent held in more secured debt, such as car loans and mortgages, and about 44 percent more in unsecured debt, such as would be credit cards and medical and utility bills than filers in 2001.

Their income, meanwhile, has remained static over the six years, according to the study, which used data from the 2007 Consumer Bankruptcy Project, a joint effort of law professors, sociologists and physicians. Researchers surveyed nationwide households in 2500 because of bankruptcy filed in February and March 2007.

“Prior downturns followed booms strong, so he entered recessions in families with higher revenue and lower debt loads,” said Elizabeth Warren, a professor at Harvard Law School and, together with Professor Lawless, part of the team of project bankruptcy. “But the fundamental are off families, even before the recession hit this time, so bankruptcy filings are likely to grow faster.”

Not surprisingly, filings are increasing rapidly in most countries where real estate values skyrocketed and then crashed, including Nevada, California and Florida. In Nevada, bankruptcy filings to October were 70 percent compared with last year. In California, bankruptcies jumped 80 percent during the same period, while Florida increased filings of 62 percent.

In these regions, there are some people who try to save their homes through bankruptcy proceedings, but as many are relieved to go away, shedding layers of debt that otherwise would have taken decades to pay.

Tony and Carrie Forsyth, both 30, chose not to go to their home in Florida. Couples have said that their financial situation thought would improve in 2006, when Mr. Forsyth has accepted a promotion from his employer, a distributor of food Michigan, that they needed to move to Florida. But they could not sell their home in Ypsilanti, Mich., So they decided to rent it.

In June 2006, the couple headed south and bought a house for $ 220,000 in Tamarac, FLA., With no money down. Five months later, tenants in Michigan stopped payment, and took the family to carry two mortgage payments, just as adjustable-rate mortgage Michigan on their home to reset at a rate higher. They lost to foreclosure Michigan home, in February 2007.

By this time, however, couples, young people, who have two daughters were using credit cards to pay for food, utilities and clothes. After accumulating about $ 20,000 in debt, they said, they realized that bankruptcy was the only way they could remain in their Florida home, whose value, meanwhile, has plunged 25 percent. They filed for Chapter 13 bankruptcy protection this year, which allows them to take home and agreed to repay part of their debts over the next three years.

A Chapter 7 bankruptcy, by contrast, provides filers with what is known as a “new beginning” because debts are forgiven. In this case, the assets are liquidated, even to allow the various state exemptions. To qualify for a Chapter 7, filers need a way to pass the test to determine if they are unable to repay their debts.

Filers who are deemed able to repay a portion of their debts to file for Chapter 13 bankruptcy. Some debtors choose Chapter 13, because it allows them to save their homes from the main hindrance, even if they are to catch up on their mortgage payments.

Mr Forsyth said declaring bankruptcy was a difficult step. “Because of our Christian background, it does not feel right,” he said. “But there was no other way for us to live and support our family we went unless the route.”

Ms Forsyth added: “We’re just rolling with life. We need to eat. You must have diapers.”

Forsyths are emblematic of new forces that have led to the sudden increase in bankruptcy filings. “History, a person will get behind a mortgage, because temporary financial catastrophic event, such as loss of jobs, divorce, illness,” said Chip Parker, a bankruptcy lawyer in Jacksonville, FLA. “However, when these adjustable-rate mortgages reset at the beginning of the teaser rate and their clients could not Refinance kind of problems they were behind Getting even if there was no catastrophic event. ”

Bankruptcy lawyers report that they have been having more consultations with middle-class families with six-figure incomes - including many who bought a house, either during or bum out most or all of their home equity , Available only to keep pace with the cost of living. Also caught up in bankruptcy are in real estate investors, who hoped to Flip properties bought near the height of the market.

“There are a lot of Foreclosures not have occurred because people still credit available,” said Jeffrey H. Tromberg, a bankruptcy lawyer in Fort Lauderdale, fla. “We do not see them until I Maxed their credit cards.”

A similar pattern emerged in Las Vegas, where more people are filing for Chapter 7 bankruptcy protection because it makes more financial sense to move away from their homes. Real estate values have plummeted, and now the local economy is also suffering. Car salesmen are being casino dealers on the set. Valet parking attendants and masseuses are less in collecting tips.

“My clients are people that have essentially a home in the best way they can and can not fulfill their obligations here, because he went down,” said Roger P. Crotia, a lawyer from Las Vegas, which focuses on bankruptcy. “There is no capital to pay off their credit cards, and they are Maxed out. They have not saved enough, because the cost of housing.”

Ellen Stoebling, a bankruptcy lawyer in Las Vegas, added: “People are using the cards to try to hold onto their property, as long as possible, hoping that you can talk some sense into their lender and residence ownership. ”

The problems are not limited to people with adjustable-rate mortgages and housing, which are worth less now owe them. Loss of jobs are also to play a role. Bankruptcies are also up sharply in Delaware, Rhode Island, and Indiana, where unemployment rates have been climbing.

And, of course, some people continue to seek bankruptcy for reasons as usual.

Lisa Marquis, 35 years old, mother of five in Indiana, has no medical insurance, but suffered 21 operations in the past nine years, some linked emphysema and other respiratory diseases, and other related accidents and more abortions .

Ms. Marquis can not work, but her husband earns $ 13.50 an hour as a truck driver - a salary that makes them ineligible for Medicaid but can not pay their medical bills. Earlier this year, the family had to leave the mobile home they owned the mold, because there was making difficult for it to breathe, they moved into a house in which they paid more than $ 600 per month in rent. Mr. Marquis was spending three days a week in court fending angry creditors, reducing the number of hours he could.

In April, faces more than 114,000 dollars in bills and less care available for overtime work, the MARQUISES filed for Chapter 13 bankruptcy - the third time in less than 10 years, that Mrs. Marquis file had for protection, because medical bills. Because the latest is a Chapter 13 filing, they have agreed to pay a portion of their debts.

“We could have waited to make a 7,” said Mrs. Marquis. “I want to pay my debts. I did not want to cheat people who have helped to save my life.”

Despite the rise in bankruptcy, academics and lawyers say they believe that many others were discouraged from filing because of the 2005 bankruptcy law.

Mrs. Warren, a professor of law at Harvard, said many borrowers were left with the impression that they made a mistake, could not file. And, she claimed, “the widespread perception that bankruptcy is not available to help families make this the economic crisis worse.”