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TOTAL BANKRUPTCY FILINGS INCREASE 31 PERCENT, BUSINESS FILINGS SURGE 54 PERCENT IN 2008

March 5, 2009 Alexandria, Va. — Total bankruptcy filings in the United States increased 31 percent in 2008 over calendar year 2007, according to data released today from the Administrative Office of the U.S. Courts (AOUSC). Bankruptcy filings totaled 1,117,771 for the 12-month period ending Dec. 31, 2008, a significant increase over the previous year’s total of 850,912. The 2008 filing total marks the first year since the implementation of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) that bankruptcies have surpassed 1 million.  

'Today's numbers confirm what we have reported previously, that bankruptcies are on the rise, and will continue to spike upward in 2009,' said ABI Executive Director Samuel J. Gerdano. 'We expect filings to reach 1.4 million or even more this year, especially if Congress changes the law to permit homeowners to modify home mortgages via chapter 13.' 

Business bankruptcies recorded the sharpest percentage increase as the 43,546 business filings during calendar year 2008 represented a 54 percent increase in filings from the 28,322 filings made during the 12-month period ending Dec. 31, 2007. The 12-month business filing total for 2008 was the highest since the 44,367 filings recorded for the 1998 calendar year. 

The 1,074,225 consumer filings during the 2008 calendar year represented a 31 percent increase over the 822,590 recorded during the same period in 2007. The 714,389 consumer chapter 7 filings during the 12-month period ending Dec. 31, 2008, comprised 67 percent of the total consumer filings for the 2008 calendar year, up from 61 percent the previous year. The consumer chapter 7 total for 2008 represented a 43 percent increase over the 500,613 consumer chapter 7 filings during 2007.

The 358,947 consumers who filed for chapter 13 during the 12-month period ending Dec. 31, 2008, comprised 33 percent of the overall consumer filing total. The consumer chapter 13 total for 2008 represents a 12 percent increase over the 321,359 consumer chapter 13 filings during 2007.

The 301,317 total bankruptcies recorded during the fourth calendar quarter of 2008 (Oct.1-Dec. 31, 2008) represent a 31 percent increase from the 226,413 filings during the same period in 2007. The 2008 fourth calendar quarter filing total was the first time since the implementation of BAPCPA that quarterly filings have eclipsed 300,000. The fourth quarter 2008 filing total also represented a 3 percent increase over the third quarter (July 1 – Sept. 30, 2008) total of 292,291.

The 288,416 consumer filings in the fourth quarter of 2008 represent a 32 percent increase in comparison to the 218,428 consumer filings for the same quarter of 2007. The consumer filing total for the fourth calendar quarter also represented a nearly 3 percent increase from the third quarter 2008 total of 280,787 consumer filings.

Business filings, which totaled 12,901 for the fourth calendar quarter of 2008, represented a 62 percent increase from the 7,985 filed in the same 3-month period in 2007 (Oct. 1-Dec. 31). Business filings also rose over the previous quarter as the fourth calendar quarter represented a 12 percent increase over the 11,504 business filings reported during the third quarter of 2008 (July 1- Sept. 30).

The chapter* breakdown of BUSINESS filings for the 3-month period ending Dec. 31, 2008, is 8,872 chapter 7s, 2,941 chapter 11s, 90 chapter 12s and 970 chapter 13s.

The chapter breakdown of NONBUSINESS filings for the 3-month period ending Dec. 31, 2008, is 193,246 chapter 7s, 234 chapter 11s and 94,935 chapter 13s.

States with the HIGHEST PER CAPITA FILING RATE (Total Filings) for the 12-month period ending Dec. 31, 2008:

1. Tennessee
2. Nevada
3. Georgia
4. Alabama
5. Indiana
6. Michigan
7. Ohio
8. Kentucky
9. Arkansas
10. 10. Illinois

Districts with the HIGHEST PERCENTAGE INCREASE in Total Filings for the 12-month period ending Dec. 31, 2008 (compared to the identical period in 2007):

1. Central District of California: 93.5%
2. District of Arizona: 78.9%
3. Eastern District of California: 78.1%
4. Southern District of California: 76.6%
5. District of Delaware: 73.9%

Districts with the HIGHEST PERCENTAGE DECREASEin Total Filings for the 12-month period ending Dec. 31, 2008 (compared to the identical period in 2007):

1. District of the Northern Mariana Islands: -29.4%
2. District of the Virgin Islands: -21.7%
3. Southern District of the Texas: -6.1%
4. Middle District of Louisiana: -3.1%
5. Northern District of New York: -2.2%

More information will be available at  ABI’s Statistics Page, http://www.abiworld.org/statistics.

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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 12,000 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.

*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.