Job losses and the disastrous housing market continue to drive more and more people into bankruptcy court.

Bankruptcy filings rose to 6,000 per day and are expected to increase to 1.5 million this year, up from 1.1 million in 2008, according to a report from Automated Access to Court Electronic Records in USA Today.

When the new bankruptcy law was passed in 2005, 2 million people rushed into bankruptcy before the law took effect, sending bankruptcy filings dropped drastically. Now they're almost back to what they were because, as many consumer advocates expected, bankruptcy was not the purview of the wealthy deadbeats, but is truly the last refuge for those in serious financial trouble who need a way to get a fresh financial start.

"People are contacting us too late to get help. They are in such trouble that we can't help them. They are just candidates for bankruptcy," David Jones, president of the Association of Independent Consumer Credit Counseling Agencies, told me in a telephone interview.

The agencies affiliated with the AICCCA used to be able to help 20-25% of the people who came to them to avoid bankruptcy. Now they find they can only help about 7-8%, Jones explained.He blames the problem on three things -- job losses, the disastrous housing market and medical bills. These are the same three things that have driven people to bankruptcy for years.

Market conditions are even more severe now because of the tight credit markets, Jones said. While in the past people could get a home equity line or additional credit cards to help tread water after a job loss, this escape valve just isn't there for people today.

Jones did say credit card companies are attempting to help as their risk officers realize it's better to get paid something. In hardship cases most credit card companies will lower interest rates to 0% and set payments as low as 1.5% of outstanding debt, so if you're having trouble don't hesitate to contact one of AICCA's affiliated credit counseling agencies.

The number of bankruptcy filings creep up each month. In April the number was 5,854 a day and in May it was 6,020 per day according to AACER. Commercial filings continue to rise as well. There were 255 per day in May 2008 and in May 2009 that number jumped to 376 per day.

Some states are hit harder than others. The three hardest hit states are Nevada, Michigan and California. Not a big surprise when you consider the housing market downturns in Nevada and California and the job losses in Michigan from the collapse of the auto industry.

John Pottow, University of Michigan bankruptcy law professor, told USA Today that he expects the bankruptcy filings of Chrysler and General Motors, along with their plant closings and job losses, to spark even more consumer bankruptcy filings.

So what can you do? Don't wait until you're drowning in debt. As soon as you have trouble making even one payment talk with a credit counselor.

Lita Epstein has written more than 25 books including the Complete Idiot's Guide to Improving Your Credit Score.

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