BOSTON – Bankruptcy filings in the Ocean State have more than doubled since 2006, according to the latest figures from The Warren Group.
Last year, the state had 3,456 filings for protection under Chapters 7 and 13 of the federal bankruptcy code, a 43.40 percent increase from the 2,410 filings recorded in Rhode Island in all of 2007 and an increase of 140.84 percent compared with the 1,435 such petitions filed in 2006. Chapter 7 of the bankruptcy code, which is used in most personal bankruptcies, accounted for most of the increase in both years.
“In the past, many desperate homeowners used to rely on home equity loans to pay off bills,” CEO Timothy M. Warren Jr. noted earlier this week, in reporting a similar rise in bankruptcies in neighboring Massachusetts. (READ MORE) “But as home values have plummeted and owners are left without home equity, a growing number are resorting to bankruptcy.”
Nationwide, nearly 1.1 million petitions for bankruptcy protection were filed last year, an increase of more than 30 percent compared with 2007, according to the American Bankruptcy Institute. More than 97 percent of those filings were by individuals.
Rhode Island recorded 2,902 filings under Chapter 7 last year, a 59.54 percent increase from the 1,819 the state saw in 2007 and a 159.57 percent increase from the 1118 it saw in all of 2007.
Chapter 7, the most common option for individuals seeking bankruptcy protection, allows a filer to wipe out most debts that remain after they use non-exempt assets to pay off creditors. But since late 2005, federal law has required individuals seeking bankruptcy protection to file under Chapter 13, rather than Chapter 7, if their income exceeded the state median. (READ MORE)
A slower increase was seen in filings for Chapter 13 protection, which instead requires debtors to establish a three-year or five-year repayment plan. Statewide, 649 such filings were recorded last year, 11.51 percent more than the 582 such filings in 2007 and 104.73 percent more the 317 seen in 2006.
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 www.TheWarrenGroup.com.
