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U.S. bankruptcy filings rise 28.9%

The court district that includes California sees a 60.9% increase.

August 28, 2008|From the Associated Press

NEW YORK — Nearly 1 million individuals and businesses filed bankruptcy in the 12 months ended June 30, according to U.S. Bankruptcy Court data released Wednesday.

There were 967,831 bankruptcy cases filed since July 1, 2007, up 28.9% from the prior 12 months, when cases totaled 751,056.

The largest percentage increase, 60.9%, was in the court system's ninth district, which includes California, Arizona and Nevada, states where the housing meltdown has been especially severe.

Filings spiked to 276,510 in the three months ended June 30 to the highest level of quarterly filings since late 2006. Of those, 266,767, or 96.5%, were individual filings, and 9,743, or 3.5%, were business filings.

Nonbusiness filings made up 96.5% of the bankruptcies nationwide, totaling 934,009. Of those cases 592,376 were Chapter 7 filings, which involve liquidation of nonprotected assets, such as family homes. The total also included 340,852 filings for Chapter 13 protection, which allows individuals to reorganize their finances and pay down their debt.

An additional 780 individuals filed for Chapter 11, which is normally used for businesses but can apply to individuals who are reorganizing but have more debt than allowed under Chapter 13.

By region, the highest number of combined filings was in the U.S. Bankruptcy Court's 6th District, which encompasses Kentucky, Michigan, Ohio and Tennessee. The total came to 167,561, up 21.2% in the last year.

Another economic report Wednesday found that U.S. thrifts lost $5.4 billion in the second quarter and set aside a record amount to cover losses from bad mortgages and other loans.

Data from the U.S. Office of Thrift Supervision showed federally insured savings and loans posted their second-largest quarterly loss ever in the April-June period, after the $8.8-billion loss in the fourth quarter of last year. Heavily focused on mortgage lending, thrifts have been stung by mounting home-loan defaults.

The $5.4-billion quarterly loss compared with net profits of $3.8 billion in the year-earlier period, and a loss of $627 million in the first quarter.

The 829 thrifts also set aside a record $14 billion to cover losses from bad mortgages and other loans.

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