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TOTAL BANKRUPTCY FILINGS INCREASE NEARLY 35 PERCENT OVER FIRST QUARTER 2008; BUSINESS FILINGS JUMP OVER 64 PERCENT

June 9, 2009, Alexandria, Va.— The total number of U.S. bankruptcies filed during the first three months of 2009 increased 34.5 percent over the same period in 2008 nationwide, according to data released today by the Administrative Office of the U.S. Courts. As total filings reached 330,477 during the first calendar year quarter of 2009 (Jan. 1-March 31), the total surpassed the 245,695 new cases that were filed over the same period in 2008. The total filings in the 2009 first quarter also represent a 9.7 percent increase from the 301,317 bankruptcies filed during the fourth quarter of 2008 (Oct. 1 – Dec. 31).

“Consumers and businesses are increasingly seeking bankruptcy protection in order to shelter themselves from the financial storms brought on by the current economic climate,” said Samuel J. Gerdano, ABI Executive Director.  “As unemployment figures continue to rise and financing remains elusive, we expect filings to surge past 1.4 million cases by year-end.”

Business filings for the three-month period ending March 31, 2009 totaled 14,319, representing a 64.3 percent increase over the first quarter 2008 total of 8,713. The first quarter 2009 business filing total also represented an 11 percent increase over the fourth quarter 2008 total of 12,901.

Consumer filings increased 33.4 percent to 316,158 for the three-month period ending March 31, 2009, from the 2008 first quarter total of 236,982. They also represent an 9.6 percent increase from the fourth quarter of 2008, which recorded a total of 288,416 nonbusiness filings. The percentage of consumers filing for chapter 13 protection fell slightly from 35.6 percent during the first quarter of 2008 (January 1-March 31) to 29.2 percent over the same period in 2009. The number of consumers filing for chapter 7 protection increased to 70.8 percent during the first three months of 2009, the largest percentage of consumer chapter 7 filers since the implementation of BAPCPA in 2005.

The 12-month filing total of 1,202,503 for the period ending March 31, 2009, is an increase of 33.3 percent from the same period in 2008, which totaled 901,927 filings. Nonbusiness filings for the 12-month period ending March 31, 2009, totaled 1,153,412, up 32.4 percent from the 871,186 total nonbusiness filings in the 12-month period ending March 31, 2008. Business filings for the 12-month period ending March 31, 2009, totaled 49,091, up 59.7 percent from the 30,741 business bankruptcy petitions filed in the 12-month period ending March 31, 2008.

The 819,362 total chapter 7 filings for the 12-month period ending March 31, 2009, represent a 46.3 percent increase from the 560,015 filings from the same period in 2008. Total chapter 13 filings increased 10.9 percent to 370,875 in the 12-month period ending March 31, 2009 from 334,551 in the same period last year.   Total chapter 11 filings also increased, rising 69.1 percent to 11,785 in 2009 from 6,971 in 2008. Chapter 12 filings increased 7 percent to 367 in 2009 compared to 343 filings in 2008.

The chapter* breakdown of BUSINESS filings for the 3-month period ending March 31, 2009, is: 9,700 chapter 7s, 3,431 chapter 11s, 102 chapter 12s and 1,045 chapter 13s.

The chapter breakdown of NON-BUSINESS filings for the 3-month period ending March 31, 2009, is: 223,760 chapter 7s, 248 chapter 11s and 92,150 chapter 13s.

States with the HIGHEST PER CAPITA FILING RATE (Total Filings) for the 12-month period ending March 31, 2009:

   1. Tennessee

   2. Nevada

   3. Alabama

   4. Georgia

   5. Indiana

   6. Michigan

   7. Ohio

   8. Kentucky

   9. Arkansas

  10. Illinois

Districts with the Highest PercentageINCREASE in Total Filings for the 12-month period ending March 31, 2009 (compared to the identical period in 2008):

1. Central District of California: 92.9%
2. District of Delaware: 86.0%
3. District of Arizona: 82.5%
4. Southern District of California: 74.1%
5. TIE- District of Nevada and Eastern District of California: 69.9%

Districts with the Highest Percentage DECREASE in Total Filings for the 12-month period ending March 31, 2009 (compared to the identical period in 2008):

1. District of the Northern Mariana Islands: 38.5%
2. District of the Virgin Islands: 26.1%
3. Middle District of Louisiana: 13.4%
4. Southern District of Texas: 4.3%

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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.