It is a well known fact that filing bankruptcy is increasing. US government expected to curb the bankruptcy abuse by reforming the bankruptcy law in 2005. However, the recent past has seen filings surging back, partly because of layoffs and rising unemployment. This along with tighter credit, dwindling 401(k) accounts, smaller paychecks and fewer saving have left the people to keep creditors at bay.

Financially hurt consumers used to take refuge in credit cards to help them wade through water. “The fact that consumer credit has tightened and shrunk explains why bankruptcy filings have now gone up so dramatically,” explained one of the law professors at University of Illinois.

The debt-laden consumers are approaching consumer credit counseling services for assistance. But credit counselors say that it’s harder than ever to help them. “People are coming to us in much worse shape than they used to be,” says president of a Credit Counseling Agency.

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