U.S. bankruptcy filings rise to highest since 2005

* U.S. bankruptcies total 158,141 in March -- AACER

* Monthly filings highest since 2005

NEW YORK, April 1 (Reuters) - More Americans filed for bankruptcy protection in March than at any time since federal bankruptcy laws were overhauled in 2005, reflecting the unevenness of the economy’s stabilization after the deepest recession since the 1930s.

There were 158,141 U.S. bankruptcy petitions, covering consumers and businesses, filed in March, according to preliminary data compiled from court filings and released Thursday by Automated Access to Court Electronic Records, or AACER.

The total increased 20 percent from 132,005 last March and jumped 35 percent from February’s 117,240,

March’s filings were 19 percent greater than the 133,393 recorded in October 2009. That total had been the highest since reforms to the U.S. Bankruptcy Code were implemented in October 2005. These made it harder for consumers to erase debts and for businesses to restructure without creditor interference.

“When you experience job losses, a tightening of and increase in the credit costs and rising interest rates on credit cards, people start feeling a squeeze,” said Karen Gross, president of Southern Vermont College in Bennington and director of the Coalition for Debtor Education. “You start seeing bankruptcy rates increase and that’s exactly what we’re seeing now.”

Experts say bankruptcies typically peak at least several months and often well over a year, after the economy bottoms out, in part because people and businesses view seeking court protection from creditors as a last resort.

March’s filings included 149,979 petitions by individuals and 8,162 filed by businesses, according to AACER, which is part of Jupiter eSources LLC in Oklahoma City.

About three-quarters of the petitions were filed under Chapter 7, which consumers often use to get a new start on their financial lives. Most of the rest were filed under Chapter 13, which lets people discharge some debts. There were 1,323 Chapter 11 filings, which businesses typically use.

Last year, there were 1.47 million bankruptcy filings, the most since a record 2.08 million were filed in 2005, government data show. Filings for individuals rose 32 percent to 1.41 million, and for businesses rose 40 percent to nearly 61,000.

“Filing rates will stay at least at current levels and could rise more, especially if unemployment stays near current levels,” Gross said.

“Businesses facing falling orders, growing receivables and tightening credit will too increasingly try to access the bankruptcy system, or become acquisition targets by others who see them as vulnerable, or go out of business,” she added.

The busiest three-month period for filings remains the fourth quarter of 2005, when more than 667,000 petitions were filed. More than 600,000 were in the first two weeks of October, before the bankruptcy reforms took effect. (Reporting by Jonathan Stempel; editing by Andre Grenon)