Personal bankruptcies seen mounting
It seems like every day brings news of more layoffs. Which got us wondering -- when will personal bankruptcies start catching up with the commercial ones? Alisa Roth reports.
U.S. Bankruptcy Court (Mario Tama/Getty Images)
More on The Economy, America's Financial Crisis
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Kai Ryssdal: The guy who was in charge of the last American car maker to get government money... Lee Iacocca of Chrysler weighed in on one part of the bailout today. He said he doesn't see any reason CEOs ought to be forced out in return for a bailout. Detroit aside, barely, this has been the year of the corporate bankruptcy. From Linen n' Things to Tribune company yesterday, the chapter 11 filings are coming fast and furious. For consumers, though, life seems to be chugging along even though every day brings news of more layoffs. Which got us asking, when are personal bankruptcies going to start catching up with commercial ones? We asked Marketplace's Alisa Roth to find out.
Alisa Roth: This fall the number of people filing for personal bankruptcy has gone up dramatically. In October, for example, there were more than 30 percent more filings than a year ago. Jay Westbrook is law professor at the University of Texas and he says it's a pretty safe bet that those numbers will keep going up.
Jay Westbrook:There's a lag between six months and a year from the time that people get laid off or get divorced, and the time when they actually file for bankruptcy. They're struggling, they're trying to get by, and then they realize they can't make it.
That's what happened to Mike McWhorter. He's a banker in Tennessee. He was laid off from his job and he couldn't sell his house. And meanwhile, his wife got seriously sick and even with insurance, the bills really added up.
Mike McWhorter: This whole process has been one of trying to rebuild my career, rebuild our financial situation and now we've gotten smacked down again.
Major illnesses and losing a job have both traditionally been big causes of bankruptcy. What's different now is that consumers can't get loans to tide them over. Deborah Thorne is a sociology professor at Ohio University. She guesses we'll see wealthier people being forced to declare bankruptcy.
Deborah Thorne: What I think we're experiencing now is our economic situation is affecting people who are more upper middle class and those are the types of jobs that we're seeing lost.
She says richer people typically start out with more of a cushion than poorer ones. But many can't access their money, because it's tied up in assets like houses and retirement plans.
In New York I'm Alisa Roth for Marketplace.
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