Bankruptcies up 9% in Q2

posted at 2:20 pm on August 18, 2010 by Ed Morrissey

If Democrats wonder why voters aren’t buying the Recovery Summer public-relations campaign, it’s probably because more of them than ever can’t buy much of anything.  Bankruptcy filings rose to their highest quarterly level in five years in 2010 Q2, underscoring the decline in the American economy heading into the summer:

U.S. bankruptcy filings have reached the highest level since 2005, government data released on Tuesday show, as the economy slows and the unemployment rate hovers just below double digits.

There were 422,061 bankruptcy filings between April and June, according to the Administrative Office of the U.S. Courts, up 9 percent from 388,148 in the prior three-month period, and up 11 percent from 381,073 a year earlier. …

Quarterly filings surpassed 400,000 for the first time since a record 667,431 bankruptcies were begun in the fourth quarter of 2005, when Congress overhauled federal bankruptcy laws and made it harder for people and businesses to file.

“We know the causes of bankruptcy are principally job losses and health care, with the overlay of the foreclosure crisis,” said Deborah Thorne, an associate professor of sociology at Ohio University. “It feels very unsettled, and I’m not surprised the numbers are going up. Until we get our feet on the ground, provide decent-paying jobs, and do something with the housing crisis, bankruptcies will continue to go up.”

Corroborating this is a piece of news that won’t help Harry Reid.  Nevada topped the list of filings, while not coincidentally having the highest unemployment rate in the nation and one of the worst foreclosure problems as well.  In contrast, Texas came in 48th.

Again, the root of the economic misery is the lack of investment in job-creating activities.  That comes from an expansion of government regulation that is ambiguous, ill-considered, and overreaching.  ObamaCare is the worst of these.  Chris Barden, the GOP candidate for Attorney General in Minnesota, notes the frequency in which the phrase “the Secretary shall determine” or similar language appears in the bill to show the massive uncertainties for businesses in the ObamaCare regime.  Most of the rulemaking has been left by Congress to executive fiat, and until those rules get defined, businesses have no idea how to invest — and simply won’t risk capital until absolutely necessary as a result.  And ObamaCare is hardly the only locus of uncertainty while Democrats continue to push for cap-and-trade and other burdensome regulatory regimes.

Still, one can notice a measure of improvement.  For the first time in quite a while, Reuters didn’t include the word “unexpected” in reporting negative economic results.  Perhaps they’ve finally caught up to the rest of us in reading economic indicators and understanding what they mean.


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Can crr6 count to 9?

Bishop on August 18, 2010 at 2:23 PM

Brilliance from the very first sentence. ;)

I’ll never understand the dolts who keep insisting that better days are just around the corner when they’re a decade away (at least) by now.

Might as well try to pull a 747 plane out of a dive with the engines all sputtering from lack of fuel. And worse, the ground isn’t that far below.

Dark-Star on August 18, 2010 at 2:26 PM

We know the causes of bankruptcy are principally job losses and health care, with the overlay of the foreclosure crisis,” said Deborah Thorne, an associate professor of sociology at Ohio University.

Eh?
How do “we” know that ‘health care’ is an issue here?

Count to 10 on August 18, 2010 at 2:26 PM

Corroborating this is a piece of news that won’t help Harry Reid. Nevada topped the list of filings, while not coincidentally having the highest unemployment rate in the nation and one of the worst foreclosure problems as well. In contrast, Texas came in 48th.

God bless Texas!

Doughboy on August 18, 2010 at 2:30 PM

How do “we” know that ‘health care’ is an issue here?

Count to 10 on August 18, 2010 at 2:26 PM

Ssshhh… it’s part of the liberal narrative.

Vashta.Nerada on August 18, 2010 at 2:30 PM

Ahh just basking in The Summer Of Recovery!

Would someone explain to Pinnochio the Lyin “Cousin Eddie” that yes, we would like to back the car up away from the endge of the cliff, back to the days when folks had jobs, the economy was growing, businesses were aexpanding and before the days of healthcare instead of death panels.

Back to the days of George Bush!

dhunter on August 18, 2010 at 2:30 PM

How do “we” know that ‘health care’ is an issue here?

Count to 10 on August 18, 2010 at 2:26 PM

One of the biggest causes of financial wipeouts is a sudden medical emergency. And high-quality healthcare also comes with high-quality prices.

There’s no safety net anymore for this kind of disaster that isn’t at least a bit frayed, except to be filthy rich. Insurance companies will look for ways to dump you ASAP if you get a costly condition and stable well-paying jobs are increasingly scarce.

Dark-Star on August 18, 2010 at 2:31 PM

How cunning the kenites are. How very cunning.

True_King on August 18, 2010 at 2:31 PM

IT’S NOT happening the way President Obama had planned. Unemployment blew past his 8 percent ceiling and hasn’t looked back. Private sector investment in new jobs and capital has languished. Even the head of the president’s Council of Economic Advisers, Christina Romer, has resigned.

Grow Jobs and Shrink Government – it’s pretty simple.

dnlchisholm on August 18, 2010 at 2:32 PM

If the tea party can help elect a majority “conservative” legislature and WH by 2012 and hold their feet to the fire, we can turn this country around in short order.

If we do not, it’s over.

esnap on August 18, 2010 at 2:32 PM

How do “we” know that ‘health care’ is an issue here?

Count to 10 on August 18, 2010 at 2:26 PM

I think it means that for some with a large hospital bill, the only answer is bankruptcy.

Electrongod on August 18, 2010 at 2:33 PM

Eh?
How do “we” know that ‘health care’ is an issue here?

Count to 10 on August 18, 2010 at 2:26 PM

Because it is.
with the 1099 over $600 mandate and God knows what other jewels are in it, who in his right mind would “throw down the jack” on a new business or expansion with everything up in the air?

Until the government demonstrates they are not enemies to achievers that take risks, “wait and see” will be the safer plan. But now, with everything upside down, opportunity is a moving target and slipery to persue.

saiga on August 18, 2010 at 2:34 PM

Ok I understand that high medical costs have been devastating to some people. However that being said I have known several families who have been struck with high medical costs, asked for help and received it. In my case when my Cousin died and my sister and I were her only heirs, the hospital worked with us and cut her 100,000 bill to 35,000. There is help out there.

sandee on August 18, 2010 at 2:35 PM

Embattled President Obama should win the Nobel Prize for Bankruptcies

faraway on August 18, 2010 at 2:35 PM

Recovery slumber.

Racist, sexist, anti-gay, bigoted, mean-spirited, evil-mongering, Nazi economy.

There, that’ll fix it.

NoDonkey on August 18, 2010 at 2:36 PM

Dark-Star on August 18, 2010 at 2:26 PM

You hit the nail on the head. The actual recovery is 10 years out, best case. No matter what Obama’s opinion is on the fing mosque, these people in trouble, forelosure or bankruptcy, will not have any buying power whatsoever for 10 years, even if they do get a job.
Seems to me that some brain surgeon in Washington ought to be able to figure that out.

ORconservative on August 18, 2010 at 2:36 PM

…these people in trouble, forelosure or bankruptcy, will not have any buying power whatsoever for 10 years, even if they do get a job.

ORconservative on August 18, 2010 at 2:36 PM

Yep! And that is the worst part of this!

You go bankrupt, your financial life goes straight down the toilet. For years. Even if you’re still employed at all you have about as much purchasing power as some poor soul in a soup line.

2012 really is going to be the last stop before disaster.

Dark-Star on August 18, 2010 at 2:41 PM

How do “we” know that ‘health care’ is an issue here?

Count to 10 on August 18, 2010 at 2:26 PM

We don’t. It’s another liberal myth that has been swallowed whole with no actual data to prove it. It annoys the crap out of me.

rockmom on August 18, 2010 at 2:42 PM

Can crr6 count to 9?

Bishop on August 18, 2010 at 2:23 PM

If it is nine dead babies, yes. Also, BUSHBUSHBUSHBUSHBUSHBUSHBUSHBUSHBUSH.

KinleyArdal on August 18, 2010 at 2:42 PM

There is help out there.

sandee on August 18, 2010 at 2:35 PM

I know more than one couple with 6 digit hospital bills that are not declaring bankruptcy. They gambled and lost on the “let’s save money and not buy insurance because we are sort of young and healthy” game. They negoatiated with the doctors and the hospitals and agreed to pay over time and get their bills cut way down.

Johnnyreb on August 18, 2010 at 2:43 PM

Count it!

lorien1973 on August 18, 2010 at 2:44 PM

You go bankrupt, your financial life goes straight down the toilet. For years. Even if you’re still employed at all you have about as much purchasing power as some poor soul in a soup line.

2012 really is going to be the last stop before disaster.

Dark-Star on August 18, 2010 at 2:41 PM

Not anymore. Maybe that used to be true, but people are still getting mortgages within a year of a bankruptcy. FHA will insure a loan for a borrower with a recent bankruptcy. The government controls college lending now and you can bet a bankruptcy won’t matter there either. You won’t get that Platinum Visa card for a while, but you don’t need one unless you want to rent a car.

rockmom on August 18, 2010 at 2:45 PM

rockmom on August 18, 2010 at 2:42 PM

Have some data to disprove it? Maybe an article about a magic medical fairy giving money to people left destitute by illness or accident?

Technically, “health care” isn’t really the issue, affording it is. But that’s needless nitpicking and you know it.

Dark-Star on August 18, 2010 at 2:45 PM

Right, Dark Star, it is truly serious and my theory is that in 5 years credit scores will be meaningless. I have no clue what the mortgage industry will do.
Think about it, every month the forclosure people start 9 years of zero purchasing power and I don’t know how long for bankruptcy but am assuming it is the same. As each group increases in number all these people have to power to purchase is pretty much food and clothing.
That’s a hell of alot of markets with no buyers. Cars, appliances, home improvement…………..good luck with that recovery Odumbo.

ORconservative on August 18, 2010 at 2:45 PM

rockmom on August 18, 2010 at 2:45 PM

No joke?

Just what we needed, more bailouts…

Dark-Star on August 18, 2010 at 2:46 PM

Ibama … EIPC fail.

tarpon on August 18, 2010 at 2:52 PM

Dark-Star on August 18, 2010 at 2:31 PM

ORconservative on August 18, 2010 at 2:36 PM

I hear you on the evil insurance companies. If you get something really bad, you can be screwed. But, formulating a workable business model to sell insurance at a profit kind of requires that you keep expenditures as low as you can to keed the overall price of your service half assed affordable to customers. To insulate all comers against acquiring a multi million dollar problem comes at the expense of the other plan participants.

The wildly increasing cost of health care is a huge problem, and defensive medicine plays into that. Not to mention government paperwork, regulation, and frivolous law suits..

I say let the free market work in the framework of insuring everyone that pays, devising a plan to handle pre-existing conditions, make it easier for customers to understand exactly what each policy provides and what they get for their money. Under that framework a lot can be done to improve the current confusion and people are free to choose the options they want. Also, the bigger the individual pools of people in a plan, the better.

saiga on August 18, 2010 at 2:54 PM

Meanwhile, Zero is out engaging in backyard politics and campaigning.

He hasn’t actually performed his day job in how long?

When you put all the economic data points like this one together you end up a pretty grim picture.

Demanding that small companies borrow money and hire people as The Zero has done, is not the solution.

dogsoldier on August 18, 2010 at 2:55 PM

Here’s the study on medical bankruptcies.

RESULTS: Using a conservative definition, 62.1% of all bankruptcies in 2007 were medical; 92% of these
medical debtors had medical debts over $5000, or 10% of pretax family income. The rest met criteria for
medical bankruptcy because they had lost significant income due to illness or mortgaged a home to pay medical
bills. Most medical debtors were well educated, owned homes, and had middle-class occupations. Three
quarters had health insurance. Using identical definitions in 2001 and 2007, the share of bankruptcies attributable
to medical problems rose by 49.6%. In logistic regression analysis controlling for demographic factors,
the odds that a bankruptcy had a medical cause was 2.38-fold higher in 2007 than in 2001.
CONCLUSIONS: Illness and medical bills contribute to a large and increasing share of US bankruptcies.

Lumped in there is loss of income from being sick which probably contributes far more to bankruptcies than the $5k for medical bills. The study was based on only 2300 random cases.

I would be interested to see what the percentage of discharged medical debt was compared to the rest of the filers total debt.

rw on August 18, 2010 at 3:04 PM

Of course they’re up. Haven’t you heard about all the unnecessary tonsillectomies and amputations?

ButterflyDragon on August 18, 2010 at 3:10 PM

I would be interested to see what the percentage of discharged medical debt was compared to the rest of the filers total debt.

rw on August 18, 2010 at 3:04 PM

The government tracks that. And the “medical bankruptcy crisis” is a tad bit overblown.

http://www.uscourts.gov/Statistics/BankruptcyStatistics.aspx

ButterflyDragon on August 18, 2010 at 3:12 PM

rw on August 18, 2010 at 3:04 PM

Which only really says that medical bills are involved — not that they are the primary cause.

Count to 10 on August 18, 2010 at 3:15 PM

I would be interested to see what the percentage of discharged medical debt was compared to the rest of the filers total debt.

rw on August 18, 2010 at 3:04 PM

http://www.justice.gov/ust/eo/public_affairs/articles/docs/abi01octnumbers.html

This link provides a summary of a 2000 study on bankruptcy by the DOJ.

Within the summary:

Medical Debt

We reviewed the Schedule F of each case to determine the amount of medical debt for each debtor. Overall, medical debt did not seem to be a major factor in the vast majority of cases. The average medical debt listed per debtor was $2,582, or about 5.6 percent of the total general unsecured debt.2 More than one half (53.6 percent) of the debtors reported no medical debt at all. Joint filers (56.2 percent) were more likely to have at least some medical debt than male filers (38.3 percent), or female filers (43.7 percent). Only 11.1 percent of debtors reported $5,000 or more in medical debts, and in only 4.4 percent of cases did medical debt comprise one-half or more of total unsecured debt.

However, the medical-debt figures were highly skewed by a few debtors with enormous medical debts. Our sample included 14 debtors with more than $50,000 in medical debts, including one debtor who listed $615,000 in medical debts. Although these debtors constituted less than one percent of our sample, they accounted for more than one-third of the total medical debt reported.

ButterflyDragon on August 18, 2010 at 3:19 PM

But they’re free to persue things like art and music without having to worry about insurance and stuff.

NickelAndDime on August 18, 2010 at 3:27 PM

Okay, can somebody explain to me how to reconcile rw’s numbers with ButterflyDragon’s numbers?

Count to 10 on August 18, 2010 at 3:32 PM

In contrast, Texas came in 48th.

More good news for that clown Bill White.

Running away from Barry won’t help you Bill.

Congratulations on another term, Governor Perry.

NoDonkey on August 18, 2010 at 3:49 PM

The study that I linked has a really low threshold for medical bankruptcy – $5k or 10% of net family income. The study gets thrown around a lot by the left to justify whatever it is that they want to do that day with health care. It really looks to be nothing more than a survey of bankruptcies that include medical bills. I only briefly scanned it, but since it doesn’t seem to show percentage of medical debt vs total debt, I would bet that that data would undermine their thesis.

rw on August 18, 2010 at 3:58 PM

Okay, can somebody explain to me how to reconcile rw’s numbers with ButterflyDragon’s numbers?

Count to 10 on August 18, 2010 at 3:32 PM

Sure, one is from the government using actual data from bankruptcy papers filed, the other is from the AMA using datasets within a survey.

If you look at Table 2 in the study rw posted, it’s not a percentage of ALL bankruptcies. From their Table 2 “*Percentage based on recent homeowners rather than all debtors.”

They hired a mathamagician to get the numbers they wanted.

I trust the DOJ using actual Schedule F’s rather than a telephone survey with questionable methods on how they’re presenting the data.

ButterflyDragon on August 18, 2010 at 4:04 PM

Have some data to disprove it? Maybe an article about a magic medical fairy giving money to people left destitute by illness or accident?

Technically, “health care” isn’t really the issue, affording it is. But that’s needless nitpicking and you know it.

Dark-Star on August 18, 2010 at 2:45 PM

I did a bankruptcy a few years ago. I got a loan within a year. I have 2 mortgages and going on a third. Why did I do bankruptcy. 1. healthcare bills I could not pay due to a 2. Divorce 3. and lost my job.

You have to list everything if you have a backruptcy and you look for a loan. You have to show your release of debtor and your exhibit F to prove you are released. My credit rating is very good now.. but I also do not have C.C.’s and I don’t plan too. I do not spend more then I can pay and I do not have more debt then cash ratio.

Crap happens…. people are not perfect.

upinak on August 18, 2010 at 4:12 PM

rw on August 18, 2010 at 3:04 PM

Personally mine was 50/50. That was not a good year.

upinak on August 18, 2010 at 4:15 PM

Can crr6 count to 9?

Bishop on August 18, 2010 at 2:23 PM

Only wearing sandals and only if “another” counts as three through nine.

viking01 on August 18, 2010 at 4:20 PM

But…but…but….it’s RECOVERY SUMMER! Sheriff Joe said so himself!

GarandFan on August 18, 2010 at 4:59 PM

Reuters didn’t use “unexpected”? Well, that is actually unexpected!

Pablo Snooze on August 18, 2010 at 6:44 PM

It could be restructuring if it’s the right type of bankruptcy. Of course, with higher taxes on the way, an anti-business administration, and a recession being pushed on by Keynesian socialists… well, I can’t seem to find my rose-colored glasses and even pretend that there are many restructuring bankruptcies going on.

CPL 310 on August 18, 2010 at 7:44 PM

One of the biggest causes of financial wipeouts is a sudden medical emergency. And high-quality healthcare also comes with high-quality prices.

There’s no safety net anymore for this kind of disaster that isn’t at least a bit frayed, except to be filthy rich. Insurance companies will look for ways to dump you ASAP if you get a costly condition and stable well-paying jobs are increasingly scarce.

Dark-Star on August 18, 2010 at 2:31 PM

That is nothing new. I knew people in the ’80 taking out banruptcy because of healthcare costs. Democrats demagogued it during the healthcare debate and you are still buying the spin.

My guess is the country will be taking out bankruptcy if we don’t repeal the healthcare bill.

petunia on August 18, 2010 at 7:57 PM