BOSTON – Chapter 7 bankruptcy filings soared in Massachusetts during the first three quarters of 2009 compared with the same period last year, The Warren Group reported Thursday.
The real estate research firm said 11,872 Bay State residents filed for Chapter 7 bankruptcy protection from January through September, a 35 percent increase over 2008.
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People seeking Chapter 7 bankruptcy protection can eliminate most debt after non-exempt assets are used to pay off creditors.
“A growing number of people are being forced into bankruptcy because job losses and salary cuts have made it difficult for them to pay their bills. Some have relied on credit cards to pay for even basic living expenses and now are seeking protection under bankruptcy law as a last resort,” said Timothy M. Warren Jr., CEO of The Warren Group.
In the third quarter, Chapter 7 filings totaled 4,098, a 34 percent increase from a year earlier but a decrease of 8.7 percent from the previous quarter.
The research firm said 2009 numbers remain below 2005 levels, when 14,468 people filed for Chapter 7 protection in the first three quarters.
The Warren Group attributed that spike to people rushing to file before a new law took effect that forced debtors to file under Chapter 13 if their income exceeds the median income in their state. Unlike Chapter 7 bankruptcy, Chapter 13 bankruptcy mandates a three- or five-year repayment plan.
Chapter 13 bankruptcies in Massachusetts dropped 23 percent to 2,463 in the first three quarters of 2009, from 3,216 in the first three quarters of 2008.
The Warren Group Inc. is a provider of New England real estate data and the publisher of Banker & Tradesman and other journals. Additional information is available at TheWarrenGroup.com.
