Total Bankruptcy Filings Up 34 Percent Business Filings Up 61 Percent in Third Quarter
TOTAL BANKRUPTCY FILINGS UP 34 PERCENT, BUSINESS FILINGS UP 61 PERCENT IN THIRD QUARTER
December 15, 2008 Alexandria, Va.— The 292,291 total U.S. bankruptcies filed during the third quarter of 2008 (July 1 – Sept. 30) represented a 34 percent increase over the 218,909 cases filed over the same period in 2007, according to data released today by the Administrative Office of the U.S. Courts. Total filings for the first nine months of 2008 (Jan. 1 – Sept. 30) were up 35 percent to 841,496, compared to the 622,999 filings during the same period in 2007.
“The dramatic spike in both personal and business bankruptcies reflects an economy in distress, with worried consumers over-extended and unable to supply the spending typically needed to keep the national economy going,” said ABI Executive Director Samuel J. Gerdano.
The 29,960 business bankruptcies recorded during the first three quarters of 2008 (Jan. 1 – Sept. 30) have eclipsed the full year 2007 (Jan. 1- Dec. 31) business filing total of 28,137. Business filings represented the sharpest increase during the three-month period ending Sept. 30, 2008, with 11,504 filings, up 61 percent over the 7,167 business filings in 2007. Chapter 11 business filings spiked to 2,485 during the third quarter of 2008, an increase of 76 percent over the 1,410 filings during the similar period in 2007. Chapter 7 business filings also increased to 7,927 during the three-month period ending Sept. 30, 2008, representing a 65 percent increase over the 4,816 filings during the similar period in 2007.
Consumer filings totaled 280,787 during the third quarter of 2008 (July 1-Sept. 30), representing a 33 percent increase over the 211,742 filed during the same period of 2007. Consumer chapter 7 filings during the 2008 third quarter totaled 187,227, an increase of 47 percent over the 2007 third quarter total of 127,192. Chapter 13 consumer filings also increased during the three-month period ending Sept. 30, 2008, with the 93,333 filings, representing an 11 percent increase over the 84,376 filings during the same period in 2007.
The 1,042,993 total filings for the 12-month period ending Sept. 30 were up more than 30 percent from the same period in 2007, which totaled 801,269. The bankruptcy filing rate per thousand U.S. residents totaled 3.38 for all chapters during the 12-month period ending Sept. 30, 2008, as 2.21 Americans per thousand filed for chapter 7 while 1.15 per thousand filed for chapter 13 bankruptcy, all increases from the similar period a year ago. Tennessee was the state with the highest per capita filing rate in the country, with 7.27 residents per thousand filing in all chapters, and also had the highest per capita filing rate for chapter 13 filings at 4.16. The state with the highest per capita filing rate for chapter 7 bankruptcy was Nevada at 4.30 per thousand for the 12-month period ended Sept. 30, 2008.
Nonbusiness filings for the 12-month period ending Sept. 30, 2008, totaled 1,004,342, an increase of 30 percent from the 775,344 total nonbusiness filings calculated over the same period in 2007. Business filings for the 12-month period ending Sept. 30, 2008, totaled 38,651, up 49 percent from the 25,925 bankruptcy petitions filed in the 12-month period ending Sept. 30, 2007.
The 679,982 total chapter 7 filings for the 12-month period ending Sept. 30, 2008, represent a 40 percent increase from the 484,162 filings from the same period in 2007. Chapter 11 filings also increased, rising 49 percent to 8,799 in 2008 from 5,888 in 2007. Total chapter 13 filings increased 14 percent to 353,828 in the 12-month period ending Sept. 30, 2008, from 310,802 in the same period last year. Chapter 12 filings, however, decreased 8 percent from 361 in 2007 to 332.
BUSINESS FILINGS for the 3-month period ending Sept. 30, 2008, totaled 11,504, up 61 percent from the 7,167 bankruptcy business cases filed in the same period in 2007. NON-BUSINESS FILINGS for the 3-month period ending Sept. 30, 2008, increased 33 percent from 211,742 in 2007 to 280,787 in 2008.
The chapter* breakdown of BUSINESS filings for the 3-month period ending Sept. 30, 2008, is: 7,927 chapter 7s, 2,485 chapter 11s, 89 chapter 12s and 983 chapter 13s.
The chapter breakdown of NON-BUSINESS filings for the 3-month period ending Sept. 30, 2008, is: 187,227 chapter 7s, 227 chapter 11s and 93,333 chapter 13s.
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 11,500 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.