Personal bankruptcies jumped by nearly one-third in 2008 as 1.06 million consumers filed for protection, said the American Bankruptcy Institute Thursday. The increase comes after a 40-percent upsurge in bankruptcy filings in 2007. “This underscores that the underlying economic problems of consumers who are facing high debts, flat incomes, and now declining home values are a very powerful force that pushes people over the edge,” says Samuel Gerdano, executive director of the ABI. Amidst the current housing and unemployment crisis, more consumers, unable to keep up with their mortgage payments and crushing credit card debt, are turning to credit card debt relief and loan modification programs, and as a last resort, bankruptcy, said the Institute. Some of the states with the highest levels of bankruptcy filings, Florida, Nevada, and California, are also among those states hardest hit by the real-estate crash and skyrocketing foreclosures. In California, bankruptcy filings in October were up an astounding 80 percent over last year; in Florida, 62 percent; and in Nevada, the state with the highest number of foreclosures in the nation, filings surged by 70 percent. As of Thursday, Sen. Richard Durbin (D-Ill.) was weighing a key concession to the financial services industry on legislation that would allow judges to workout mortgages in the bankruptcy process. Durbin said he may limit the bill to existing subprime loans, which could make the legislation more appealing to the financial services industry — who has strongly opposed the bill thus far. “I am willing to negotiate,” Durbin said, according to an American Banker report. “I want this to be a reasonable approach, but we have to include [bankruptcy]. If we don’t include it, we’ll be stuck in the same mess we’re in today.” The American Bankruptcy Institute expects bankruptcy filings will continue to rise. “It’s the aftermath of the debt overhang that many households are facing, plus an inability to tap into home equity, which traditionally helped buttress home finances,” said Gerdano. Write to Kelly Curran at email@example.com. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.