October Consumer Bankruptcy Filings Top 100000 for First Time Since Law Change in 2005
Contact: John Hartgen
OCTOBER CONSUMER BANKRUPTCY FILINGS TOP 100,000 FOR FIRST TIME SINCE LAW CHANGE IN 2005
November 4, 2008, Alexandria, Va.- U.S. consumer bankruptcy filings increased 40 percent nationwide in October from the same period a year ago, according to the American Bankruptcy Institute (ABI), relying on data from the National Bankruptcy Research Center (NBKRC). The overall October consumer filing total of 106,266 also represented a 20 percent increase from September. Chapter 13 filings constituted 32.6 percent of all consumer cases in October, a slight decrease from September.
The October consumer filing total also represents the first time that bankruptcies have topped 100,000 since the Bankruptcy Abuse Prevention and Consumer Protection Act went into effect in October 2005. The 880,076 consumer filings through the first 10 months of 2008 (Jan. 1 - Oct. 31) have already eclipsed the filing total of 822,590 for all of last year.
“October's sharp spike in new consumer bankruptcies confirms the severe financial stress on household budgets caused by high debts, flat incomes, and declining home values,” said ABI Executive Director Samuel J. Gerdano. “We expect the 2008 numbers to be the highest since the new bankruptcy law went into effect in 2005.”
ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes more than 11,700 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org. For additional conference information, visit http://www.abiworld.org/conferences.html.
NBKRC is an online research center that offers subscribers access to up-to-date research and statistics on bankruptcy filings. The database contains complete information dating back to 1995. For more information on NBKRC, please visit http://www.nbkrc.com.
*Definitions from Bankruptcy Overview: Issues, Law and Policy, by the American Bankruptcy Institute.
Chapter 7 of the Bankruptcy Code is available to both individual and business debtors. Its purpose is to achieve a fair distribution to creditors of the debtor's available non-exempt property. Unsecured debts not reaffirmed are discharged, providing a fresh financial start.
Chapter 11 of the Bankruptcy Code is available for both business and consumer debtors. Its purpose is to rehabilitate a business as a going concern or reorganize an individual's finances through a court-approved reorganization plan.
Chapter 12 of the Bankruptcy Code is designed to give special debt relief to a family farmer with regular income from farming.
Chapter 13 of the Bankruptcy Code is available for an individual with regular income whose debts do not exceed specific amounts; it is typically used to budget some of the debtor's future earnings under a plan through which unsecured creditors are paid in whole or in part.