The last two years have seen record levels of bankruptcy filing among individuals. In 1996, the number of personal bankruptcy cases exceeded one million for the first time in history. Just one year later, the number of bankruptcy petitions in the U.S. had risen by 20 percent. Current bankruptcy filings are now at triple the levels of the early 1980s. This is a sobering thought considering the strong economy we have enjoyed in the 1990s compared to the high unemployment and sky-rocketing interest rates of the 1980s.
Analysts say many factors have contributed to the increase in bankruptcy petitions.
Household debt, including mortgage and consumer credit, rose dramatically in the last two decades. Not surprisingly, credit card debt grew faster than any other type of consumer credit debt. Social factors are also blamed for the increase in bankruptcy filing. Single parenthood, divorce, and legalized gambling, as well as a declining sense of shame associated with bankruptcy, reportedly led to increased filings. Finally, local factors such as lenient state bankruptcy laws also contributed to unmanageable consumer debt.