Total U.S. Bankruptcies in First Half of 2008 Up 29 Percent from a Year Ago
Contact: John Hartgen
TOTAL U.S. BANKRUPTCIES IN FIRST HALF OF 2008 UP 29 PERCENT FROM A YEAR AGO
August 27, 2008, Alexandria, Va.- The total number of U.S. bankruptcies filed during the first six months of 2008 increased 29.2 percent over the same period in 2007, according to data released today by the Administrative Office of the U.S. Courts. Total filings reached 522,205 during the first half of the calendar year of 2008 (January 1-June 30), compared to 404,090 cases filed over the same period in 2007.
“The continued rise in bankruptcies to their highest levels since Congress changed the law points to the growing strain on family budgets,” said ABI Executive Director Samuel J. Gerdano. “We expect this trend to continue through the end of the year, with cases surging past 1 million by year end.”
Filings by individuals or households with consumer debt increased 28.8 percent to 503,749 for the six-month period ending June 30, 2008, from the 2007 first-half total of 391,105. The overall percentage of consumers filing for chapter 13 protection fell slightly from 38.4 percent during the first half of 2007 (January 1-June 30) to 33.8 percent over the same period in 2008. Conversely, the first-half 2008 percentage of chapter 7 consumer filers increased to 66.1 percent from the 61.6 percent recorded in the first half of 2007.
Business filings for the six-month period ending June 30, 2008, totaled 18,456, representing a 42.1 percent increase over the first-half 2007 total of 12,985. Chapter 7 business liquidations increased to 13,002 in the first half of 2008, a 54.7 percent increase over the 8,404 business chapter 7 filings during the same period in 2007. Chapter 11 reorganizations also rose from 2,713 in the first half of 2007 to 3,470 in the same period of 2008, a 27.9 percent increase.
The 276,510 total filings for the second calendar quarter 2008 (April 1-June 30) represented a 12.5 percent increase from the first quarter 2008 (Jan. 1-March 31) filings of 245,695. Business filings in the second quarter of 2008 increased 11.8 percent to 9,743 over the 8,713 business filings in the first quarter. Of note, however, is that chapter 11 business filings decreased 8.5 percent in the second calendar quarter of 2008 to 1,658 from the 1,812 filings of the first quarter of 2008. Consumer filings increased 12.6 percent from 236,982 recorded in the first quarter of 2008 to 266,767 in the second quarter.
The 967,831 total filings for the 12-month period ending June 30, 2008, represented a 28.9 percent from the same period in 2007, which totaled 751,056. The bankruptcy filing rate per thousand U.S. residents totaled 3.15 for all chapters during the 12-month period ending June 30, 2008, as 2.0 Americans per thousand filed for chapter 7 while 1.12 per thousand filed for chapter 13 bankruptcy. Tennessee was the state with the highest per capita filing rate in the country with 6.92 residents per thousand filing in all chapters, and also had the highest per capita filing rate for chapter 13 filings at 4.08. The state with the highest per capita filing rate for chapter 7 bankruptcy was Michigan at 3.82 per thousand for the 12-month period ended June 30, 2008.
Nonbusiness filings for the 12-month period ending June 30, 2008, were up to 934,009 filings, a 28.4 percent increase from the 727,167 total nonbusiness filings over the same period in 2007. Business filings for the 12-month period ending June 30, 2008, totaled 33,822, up 41.6 percent from the 23,889 bankruptcy petitions filed in the 12-month period ending June 30, 2007.
The 615,748 total chapter 7 filings for the 12-month period ending June 30, 2008, represent a 36.7 percent increase from the 450,332 filings from the same period in 2007. Total chapter 13 filings increased 16.9 percent to 344,421 in the 12-month period ending June 30, 2008, from 294,693 in the same period last year. Total chapter 11 filings also increased, rising 30.6 percent to 7,293 in 2008 from 5,586 in 2007. Contrasting the upward trend, however, were chapter 12 filings, which decreased 18.7 percent from 386 in 2007 to 314 in 2008.
BUSINESS FILINGS for the 3-month period ending June 30, 2008, totaled 9,743, up 45.3 percent from the 6,705 bankruptcy business cases filed in the same period in 2007. NON-BUSINESS FILINGS for the 3-month period ending June 30, 2008, increased 30.9 percent from 203,744 in 2007 to 266,767 in 2008.
The chapter* breakdown of BUSINESS filings for the 3-month period ending June 30, 2008, is: 7,043 chapter 7s, 1,658 chapter 11s, 85 chapter 12s and 940 chapter 13s.
The chapter breakdown of NON-BUSINESS filings for the 3-month period ending June 30, 2008, is: 180,353 chapter 7s, 230 chapter 11s and 86,184 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 11,700 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.
*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.