Business and consumer bankruptcies increased in Indiana and Illinois during the first half of 2009 compared to the same period in 2008.

Following a national trend, Indiana bankruptcies increased 28.4 percent and Illinois bankruptcies jumped 32.9 percent from Jan. 1 through June 30 compared to the first six months of last year, according to data from the American Bankruptcy Institute.

There were 24,096 bankruptcies filed in Indiana and 35,902 bankruptcy cases filed in Illinois in the first six months of the year. Bankruptcies filed at federal courts in Hammond, Fort Wayne, Lafayette and South Bend increased 40.2 percent in the first half of 2009 compared to a year earlier.

Both states are on pace to beat last year's totals, which were at their highest levels since 2005.

Darrolyn Sharp, executive director of a Merrillville-based nonprofit credit counseling agency, said Northwest Indiana hasn't been immune to the trend of increased consumer bankruptcy filings. Consumer bankruptcies represented more than 97 percent of bankruptcy cases filed in Indiana and Illinois last year.

Unemployment is one factor. And, even though some clients find work after losing their jobs, they may be underemployed because their new job doesn't bring in enough money to pay the bills, Sharp said. Bankruptcy also carries a stigma with it that adds to people's financial burden, she said.

"You see them very humiliated, embarrassed. They go through all of the emotions," said Sharp, head of the Consumer Credit Counseling Service of Northwest Indiana. "But the bottom line is they cannot help themselves. People don't want to file for bankruptcy."

She estimated one out every five people visiting the counseling agency may need to file bankruptcy to reorganize their debt.

Total bankruptcies filed in the United States increased 36 percent to 711,500 in the first half of the year compared to same period in 2008. In the same period, Chapter 11 business reorganization filings in the United States increased 113 percent and Chapter 7 business liquidations increased 57 percent.

More than 1.1 million bankruptcy cases were filed in the United States in 2008, making it the first year since 2005 in which the number of bankruptcies filed in the nation topped 1 million, the institute said.

Samuel Gerdano, the American Bankruptcy Institute's executive director, said in an August news release the increase in filings "is a product of continued financial stresses weighing on both consumers and businesses." Bankruptcies in the U.S. are expected to surpass 1.4 million by the end of the year, Gerdano said.

Cal Bellamy, partner with Krieg DeVault LLP, said small businesses are caught in the "perfect storm" of having difficulty obtaining credit for daily operations and a slowdown in payments or reduction in orders from their customers. Bellamy said there could be an increase in the number of business bankruptcies because, although the economy may have stopped its sharp decline, conditions may not improve enough to sustain all businesses.

Indiana had 39,305 bankruptcies in 2008, up 20.8 percent from a year earlier, and the organization said Indiana had the fifth-highest per capita bankruptcy filing rate in the country. Illinois was 10th highest with 56,116 bankruptcies filed, up 26.1 percent from the previous year.

The Alexandria, Va.,-based American Bankruptcy Institute is a nonpartisan research organization that does research and analysis of bankruptcy issues. The organization analyzes data from the Administrative Office of the U.S. Courts.