NEW YORK (CNNMoney.com) -- As things in the economy have gotten worse, the number of people and businesses heading to bankruptcy court has spiked.

Bankruptcy filings surged 29% in the 12 months that ended June 30, according to government figures released Wednesday.

Total filings rose to 967,831 from 751,056 a year earlier.

Business filings jumped more than 41% to 33,822 from 23,889 in the year-ago period. Personal filings totaled 934,009, up 28% from last year.

"As we continue to hear more bad economic news, we will continue to see bankruptcies spiral upwards," said Jack Williams, resident scholar at the American Bankruptcy Institute.

The bankruptcy group expects filings to reach 1.2 million this year, as problems in the housing market have "reverberated throughout the economy," he added.

The data also showed that filings for Chapter 7 rose 36% to 615,748 in the 12 months that ended June 30.

Chapter 7 bankruptcy is designed to give individual debtors a "fresh start" by discharging many of their debts. Under Chapter 7 a filer's assets minus those exempted by his home state are liquidated and given to creditors first in line for repayment, while the rest of his debts are cancelled.

Another type of individual bankruptcy - Chapter 13 - requires debtors to pay back their debts over time. Total Chapter 13 filings rose 17% to 344,421 from 294,693 a year earlier.

Filings for Chapter 11 bankruptcy, which is aimed at assisting struggling corporations or partnerships, rose more than 30% to 7,293.

2005 law cracked down on filers

The increase comes near the third-year anniversary of a congressional crackdown on filers of chapter 7 bankruptcy.

The Bankruptcy Abuse Prevention and Consumer Protection Act, which made it harder for individuals to receive Chapter 7 bankruptcy protection, went into effect in late 2005. Huge numbers of people rushed to file for bankruptcy before the deadline and then filings dropped off dramatically in 2006-07.

Lawmakers who voted in favor of the law included Sen. John McCain, R-Ariz., the Republican presidential candidate, and Sen. Joe Biden, D-Del., the Democrats' vice presidential pick.

Democratic presidential candidate Sen. Barack Obama, D-Ill., voted against the act.

Recently, Obama has proposed to fast-track bankruptcy proceedings for military families and help seniors facing bankruptcy keep their home.

Proponents of the law argued that it would prevent consumers from using bankruptcy laws to clear debts that they actually have the ability to repay. Consumer advocates decried it as a boon to creditors - particularly credit card companies - that lose money when debtors declare Chapter 7 bankruptcy.

Williams said that Chapter 7 filings are starting to return to levels last seen before the 2005 law, which suggests that the decrease following its enactment "may have been an illusion."