Connecticut sees spike in Chapter 7 bankruptcy protection filings

Connecticut residents are filing for Chapter 7 bankruptcy protection at an alarming rate: up 51 percent in the first three quarters of 2009 compared to the same period last year. Chapter 7 allows individuals to eliminate most of their debt by using non-exempt assets to pay off creditors. A report released today by the Warren Group, which publishes the Commercial Record, said there were 6,289 Chapter 7 filings in Connecticut between January and September, which is the highest level for that nine-month period since 2005, when filings spiked just prior to the enactment of a federal law that requires those with incomes above the state’s median to file under a more onerous Chapter 13 repayment plan. Of those 6,289 filings, 2,275 occurred in the third quarter, 64 percent more than the 1,384 filings from the third quarter of 2008, though slightly lower than the number of second-quarter filings. Chapter 13 filings, meanwhile, fell to 888 in the first three quarters of 2009, from 1,407 over the same period last year, a 36.9 percent drop. In the meantime, some Greenwich residents have instead been frequenting appraisal sessions at the Hyatt Hotel, selling their jewelry in exchange for some extra cash. TRD