Bankruptcy Bill Passes In The US Senate

According to the independent American Bankruptcy Institute, personal bankruptcy filings have reached historic highs. For example, filings first cleared the 1 million mark in 1996. They then surpassed the 1.5 million mark in 2002. And they continue to average more than 1.6 million annually (although in 2004 they have eased off their highs).

The ABI links the high numbers of bankruptcy filings to Federal Reserve research that shows the ratio of household debt to disposable income has also reached record levels.
Consumer advocates have strongly opposed making it more difficult to file for personal bankruptcy. They have attributed the increase in filings, in part, to aggressive credit card promotions and onerous lending terms. They argue that lending policies lead some consumers to take on too much debt. Opponents of tightening the bankruptcy framework claim that unemployment, divorce and most significantly medical costs are the most common catalysts of personal bankruptcy (rather than personal irresponsibility or poor financial understanding).

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