The bankruptcy report for 2010 came in up 9 percent, according to the American Bankruptcy Institute.
Personal bankruptcies rose to 1.53 million, up 9 percent from 2009, the highest level since a revamp of the law took effect in 2005, according to the American Bankruptcy Institute, an association of attorneys and other bankruptcy professionals, and the National Bankruptcy Research Center.
A handful of Southwestern states accounted for much of the uptick in filings by households buckling under debt.
“There are two groups of people who have had really high filings during the (financial) crisis — the Pacific Southwest and the Southeast,” said Ronald Mann, a Columbia University law professor.
I wish to note a bit of personal pride in my state, California, for leading the nation in bankruptcies last year: up 25 percent, narrowly beating out Arizona at 23.9 percent. Update! Hawaii was No. 1 at 28.9 percent. Thanks, Marco. How humiliating to come in second.
All these bankruptcies are horrible, of course, as Americans were enticed to undertake more and more debt from cheap Fed induced loans that fueled the boom and bust housing market. And then the housing market went bust, taking a lot of us with it.
The bright side, if there is one, is that bankruptcy is a valid way to shed yourself of debt, enshrined as it is in the Constitution (Article I, Section 8). This “fresh start” approach to debt is also a part of the healing process of the boom-bust cycle as uncollectible debt is cleared off of lenders’ balance sheets.
— Jeff Harding is a principal of Montecito Realty Investors LLC. A student of economics, he has a strong affinity for free-market economics. This commentary originally appeared on his blog, The Daily Capitalist.