The Marketplace Report: Hurricane Bankruptcy Breaks
ALEX CHADWICK, host:
Back now with DAY TO DAY. I'm Alex Chadwick.
Hurricanes Katrina and Rita continue to influence the economy, especially in the area of jobs. More and more hurricane victims are filing for unemployment benefits. Meanwhile, there's also news for those who were completely wiped out and face potential bankruptcy. "Marketplace's" Tess Vigeland is with us.
Tess, how many people thus far have lost their jobs because of the hurricanes?
TESS VIGELAND reporting:
Well, Alex, the figures that we have today reflect the number of people who have filed for unemployment benefits, and that's been broken out to take a look at those who filed because of the hurricanes. Last week, 74,000 hurricane-related claims were filed, and that figure is the first to reflect Hurricane Rita as well as Katrina. The week before that, it was 70,000. So all told, with the figures through last week, we're looking so far at 363,000 jobs lost because of these two hurricanes.
And we'll get a bigger picture of their overall effects tomorrow. The federal government will be releasing employment figures for September. A lot of economists are expecting the unemployment rate to go back up over 5 percent.
CHADWICK: We've also been hearing a lot about this new bankruptcy that goes into effect a week from Monday and how that might make things even worse for hurricane victims. But the government is now trying to--What?--provide some relief for them.
VIGELAND: Yeah, a little bit. This is the new bankruptcy law that passed several months ago. It's scheduled to take effect on October 17th, as you said, a week from Monday. And at its most basic, it's going to make it much harder for people to wipe out their debts under Chapter 7 bankruptcy filing. People with incomes above a certain level will have to pay some of it back. A bankruptcy judge then sets up a payment plan. And you have to go to credit counseling for six months before you file. The Department of Justice said this week that people filing for bankruptcy in Louisiana and Mississippi won't have to do that credit counseling. They still will face the new tougher filing rules, but they won't have to do the counseling.
CHADWICK: But non-hurricane victims don't get that break?
VIGELAND: No, they don't. Everybody else is going to have to follow the new rules. There have been several attempts by some in Congress to get this law postponed for everybody, but those attempts have failed. And remember also that these stricter rules apply not just to individuals, but also to companies. And that's one reason, for example, that the airlines Delta and Northwest filed a couple of weeks ago. We may see some more of that corporate bankruptcy filing in the next week or so.
And coming up later today on "Marketplace," we're revisiting Waveland, Mississippi, to see how the reconstruction efforts are fairing there.
CHADWICK: Thank you, Tess.
Tess Vigeland of public radio's daily business show "Marketplace," produced by American Public Media.
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