Personal bankruptcies continue to be out of control and will likely grow to 1.6 million by the end of the year according to the American Bankruptcy Institute report released this week.

That will make this year’s bankruptcies the worst in recorded history, except for a sharp increase in 2005 when Congress changed the bankruptcy laws and there was a rush to file before the new laws took effect.

Although consumers have generally done a good job the last two years tightening their belts and reducing the amount of debt that they carry, unemployed Americans still have expenses that can’t be met and many turn to bankruptcy.

Home foreclosures continue to be high. Some are filing bankruptcy in an effort to forestall foreclosure on their homes. Foreclosure proceedings are halted when bankruptcy filing Chapter 13 bankruptcy allows borrowers the opportunity to reformulate their debts into easier payment plans so the creditors may still be paid, albeit on a longer timeframe.

Most are still filing Chapter 7, which denies creditors any payments and may require the filer to liquidate or relinquish assets. Because Chapter 7 essentially frees consumers of their debt, it continues to be the more popular option.