Bankruptcy filings hit record 1.5 million in 2001

<p>WASHINGTON – Bankruptcy filings ballooned to 1.5 million in 2001, an all-time record. Approximately 97% of those filings were for personal bankruptcies, which were up by 19%. Business bankruptcies were up 13%. In credit union land losses related to bankruptcy went up as well. Loans charged-off to bankruptcy increased by 14.2% from year-end 2000 to year-end 2001, according to NCUA data. Still the numbers aren’t as bad for credit unions as they are for the nation as a whole says NAFCU economist Jeff Taylor. “The total amount of loans charged off because of bankruptcy at credit unions was just over $1 billion. From a loan pool of $322 billion, that isn’t that high,” said Taylor. “The national numbers are more troubling. Credit unions obviously know their members better and their loan quality stayed pretty good,” he said. Taylor said rising personal bankruptcies indicate people were overleveraged during the good times, thinking the good times would never end. “It’s also hard to say how many of those were induced by lawyers. When it looked like bankruptcy reform was going to pass, there was a push by lawywers to get consumers to declare.” According to the Federal Reserve, consumer debt was $1.65 trillion as of year-end 2001. Households with at least one credit card averaged $8, 562 in credit card debt.</p>