What You Need to Know About Bankruptcy

Bankruptcy is an epidemic.

An astounding 91,214 Americans declared bankruptcy in May, up 31% from the same month a year ago. More than 1 million Americans are expected to declare bankruptcy this year, a jump of nearly 50% from last year, according to the American Bankruptcy Institute.

That means at least one in every 100 families will be affected by a bankruptcy.

It's a sign of the times: a combination of the housing and mortgage crisis, consumer debt burdens and the strains that rising energy prices are putting on household budgets.

In the first three months of the year, 516,000 new foreclosure proceedings were started. The delinquency rate (homes with at least one payment past due, but not yet in foreclosure) for single-family mortgages is now 6.35%, the highest in modern times.

Americans are now carrying $975 billion in credit card debt -- a nearly 20% increase in the past two years. Approximately half of all cardholders carry a balance, instead of paying in full every month.

The national average for interest rates on credit card debt is 12.38%. Yet many cardholders are paying "default rates" as high as 31.99%, applied to people who are late on payments or over the limit.

The sharp increase in the unemployment rate to 5.5% in May, along with the loss of 66,000 private sector jobs, is a clear indication that more people will have more trouble paying their bills. The economic situation grows more dire daily.