Bankruptcies and debt are up

Speaking of increasing interest rates. I spotted, while wandering around the Wall Street Journal for the employment post, the following story from the American Bankruptcy Institute:

U.S. consumer bankruptcy filings increased 37.1 percent nationwide in June from the previous year, according to the American Bankruptcy Institute (ABI). Relying on data from the National Bankruptcy Research Center (NBKRC), overall consumer filings totaled 68,559 in June, nearly a 2 percent decrease from the 69,684 filings in May. Chapter 13 filings constituted 38.3 percent of all consumer cases in June, a slight increase over the previous three months.

“While bankruptcy filings are up more than 30 percent from the same period last year, they are less than half of what they were in 2005,” said Samuel J. Gerdano, ABI Executive Director. “However, the underlying concerns of high debt loads are still a constant, pointing to rising filings in the future.”

That reference to 2005, by the by, was the period immediately prior to the change in personal bankruptcy law, when the horrid Bankruptcy Bill came into effect. So not really a useful comparison (suppose your government says employment figures are way up 1932, for example).

Meanwhile, back at the Wall Street Journal,

U.S. consumers borrowed double the amount Wall Street was expecting for May as credit-card use climbed at the strongest rate in six months. Consumer credit outstanding grew by 6.4%, or $12.9 billion, to $2.441 trillion from $2.428 trillion, according to the Federal Reserve report. Revolving credit, which mainly reflects credit-card financing, rose by $7.2 billion to $894.8 billion from $887.6 billion in April. The 9.8% increase was the biggest since 14.5% in November.

Score! I wonder why we’re borrowing? Oh yeah – gas prices are up, food prices are up, mortgage repayments are up, and wages are not so much. Just remember, if and/or when all the shit hits the fan in the office of your bank manager, it’s all the fault of sub-prime mortgages.

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