Personal bankruptcy filings in Connecticut went up more than 60 percent in 2008, yet another indication of the worsening economy.
According to new figures from The Warren Group, a Boston based real estate data firm, more than 5,500 people in Connecticut filed for Chapter 7 bankruptcy last year – a 66% increase over 2007. The trend is accelerating - 2008’s total was more than double that of 2006. And it’s worse than the national picture – across the country filings were up 30% in 2008 over the previous year.
Warren Group experts say the plummeting housing market may be closely linked to the rise in bankruptcy filings – previously many homeowners could have relied on taking out home equity loans to pay off mounting bills, but as home values falling, and the credit crunch taking hold, for many that’s no longer possible.
Since a change in the law three years ago, people whose income exceeds the state median must file for bankruptcy under Chapter 13, which unlike Chapter 7 does not wipe out their debt, but instead requires a 3-to-5 year repayment plan. Chapter 13 filings in Connecticut were up more than 12% in 2008.