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December Caps Record Year for US Bankruptcy Filings

January 06, 2009

ALEXANDRIA, Va. — The American Bankruptcy Institute's latest report indicates that personal bankruptcy filings increased by more than 32 percent last year. The ABI's figures, which counted 1.06 million filings in 2008 against 801,840 in 2007, were confirmed by the Administrative Office of the United States Courts.

“Consumers are under great financial stress, with no immediate end in sight,” said ABI executive director Samuel Gerdano. “We expect the upward spike in personal bankruptcies to continue in 2009.”

Subprime dealers, lenders and third-party lead-generation providers may stand to benefit from an expanding tier of credit-challenged customers. Consumers with a recently discharged bankruptcy are often new to secondary financing and, depending on the type of bankruptcy, cannot file again for several years.

“We have been monitoring the steady growth of personal BK cases,” said Robert Davies, president of OnlineBKmanager.com. “The good news is our dealer clients are working with lenders like Tidewater, CapOne, AmeriCredit, Wachovia and many others to offer quality subprime loans to these individuals.”

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was enacted in order to steer more U.S. debtors toward filing for Chapter 13 bankruptcies, which calls for a five-year repayment plan. Under a Chapter 7 filing, most debts are simply discharged.

“Currently, Chapter 7 bankruptcies represent over 75 percent of all cases being filed with the courts,” said Davies. “This fact contradicts previous thoughts that the 2005 law change would force more people into filing a Chapter 13 over a Chapter 7.

“In 2009," Davies concluded, "bankruptcy marketing will continue to prove its value to automotive retailers throughout the United States."

Open bankruptcies waiting to be discharged, by state, as of Jan. 6, 2009:

Alaska 683

Alabama 39,430

Arkansas 16,981

Arizona 12,310

California 77,530

Colorado 11,902

Connecticut 3,887

Dist. of Columbia 669

Delaware 2,446

Florida 45,958

Georgia 75,055

Hawaii 1,411

Iowa 4,035

Idaho 3,262

Illinois 46,328

Indiana 32,084

Kansas 9,555

Kentucky 17,283

Louisiana 22,139

Massachusetts 9,883

Maryland 14,077

Maine 1,785

Michigan 43,560

Minnesota 10,470

Missouri 22,665

Mississippi 14,253

Montana 1,231

North Carolina 31,867

North Dakota 833

Nebraska 6,237

New Hampshire 2,724

New Jersey 20,986

New Mexico 2,645

Nevada 13,529

New York 33,172

Ohio 50,743

Oklahoma 15,860

Oregon 10,064

Pennsylvania 31,976

Rhode Island 1,882

South Carolina 14,705

South Dakota 1,070

Tennessee 48,881

Texas 55,763

Utah 7,943

Virginia 26,856

Vermont 1,125

Washington 16,326

Wisconsin 15,481

West Virginia 3,256

Wyoming 705

Total: 955,501

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