U.S. bankruptcy filings rose in the first quarter to the highest since 2005, government data show, as rising unemployment, falling housing prices and tight credit made it harder for people to hold off their creditors.

There were 330,477 filings in the January-to-March period, up 10 percent from the previous quarter and up 35 percent from a year earlier, the Administrative Office of the U.S. Courts said this week. Consumer bankruptcy filings rose 33 percent from a year earlier, while business filings rose 64 percent.

For the year ended March 31, bankruptcy filings rose 33 percent to 1,202,503. Experts expect further increases as the unemployment rate heads toward 10 percent and the economy struggles to emerge from an 18-month-old recession.

There is a direct correlation with troublesome conditions in the economy: a lack of credit, margins being squeezed, and an inability to refinance, said Leonard Goldberger, a partner at the law firm Stevens & Lee PC in Philadelphia and former vice president of the American Bankruptcy Institute (ABI). And bankruptcy is historically a lagging indicator of the economy: today's survivors can be tomorrow's victims.

Many states with large numbers of bankruptcies have been hit particularly hard by the housing crisis. California had the most filings in the quarter with 42,992, followed by 20,701 in Florida and 18,154 in Georgia. Illinois came next, followed by Michigan, Ohio, Tennessee, New York and Texas.

The three-month total was the highest since the fourth quarter of 2005, when there was a rush of filings ahead of a new bankruptcy law designed to curb abuses, and which took effect in mid-October of that year.

Filings have continued to increase in the current quarter. There were 250,456 consumer bankruptcies in April and May, the ABI said, citing data from the National Bankruptcy Research Center. Commercial filings are up by nearly half, according to Automated Access to Court Electronic Records.

Lenders say they are taking steps to help borrowers stay afloat. It is often more costly for providers of cards, mortgages and other credit to let their customers go bankrupt.

Lowering interest rates, suspending fees and extending repayment terms are among the number of ways we can work with those facing serious financial hardship, said Paul Hartwick, a spokesman for JPMorgan Chase & Co .

Betty Riess, a Bank of America Corp spokeswoman, urged card customers worried about falling behind to call the bank. We look at their individual situations and based on that can propose customized solutions, she said.

Chapter 7 filings, often used by consumers, rose 47 percent in the quarter to 233,460. Chapter 13 filings, which let people discharge some debts, rose 10 percent to 93,195. Chapter 11 filings, used by businesses, soared 83 percent to 3,679.

On a per capita basis, Tennessee had the most filings over the last year, with 8.1 per 1,000 population, followed by Nevada with 8.07 per 1,000. Goldberger said Tennessee's ratio is high because of laws that make it easier for creditors to attach a debtor's wages. California was 17th and Florida 18th.

(Reporting by Jonathan Stempel; editing by John Wallace)

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