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TOTAL U.S. BANKRUPTCIES IN FIRST HALF OF 2009 UP 36 PERCENT OVER FIRST HALF OF 2008; CHAPTER 11 BUSINESS FILINGS INCREASE 113 PERCENT

August 13, 2009, Alexandria, Va.— The total number of U.S. bankruptcies filed during the first six months of 2009 increased 36 percent over the same six month period in 2008, according to data released today by the Administrative Office of the U.S. Courts. Total filings reached 711,550 during the first half of the calendar year of 2009 (January 1-June 30), compared to 522,205 cases filed over the same period in 2008.

“The increase in filings through the first half of this year is a product of continued financial stresses weighing on both consumers and businesses,” said ABI Executive Director Samuel J. Gerdano. “In this challenging economic environment, we expect bankruptcies to surge past 1.4 million by year end.”

Business filings for the six-month period ending June 30, 2009, totaled 30,333, representing a 64 percent increase over the first-half 2008 total of 18,456. Chapter 11 business reorganizations increased 113 percent to 7,396 during the first half of 2009 from 3,470 in the same period of 2008. Chapter 7 business liquidations increased to 20,375 in the first half of 2009, a 57 percent increase over the 13,002 business chapter 7 filings during the same period in 2008.

Filings by individuals or households with consumer debt increased 35 percent to 681,217 for the six-month period ending June 30, 2009, from the 2008 first-half total of 503,749. The overall percentage of consumers filing for chapter 13 protection fell slightly from 34 percent during the first half of 2008 (January 1-June 30) to 28 percent over the same period in 2009. Conversely, the first-half 2009 percentage of chapter 7 consumer filers increased to 72 percent from the 66 percent recorded in the first half of 2008.

The 381,073 total filings for the second calendar quarter 2009 (April 1-June 30) represented a 38 percent increase from the second quarter 2008 filing total of 276,510. Business filings in the second quarter of 2009 increased 64 percent to 16,014 over the 9,743 business filings in the second quarter 2008. The second quarter 2009 business filings were the highest total since the second quarter of 1993 when business filings reached 16,424. Consumer filings increased 37 percent from 266,767 recorded in the second quarter of 2008 to 365,059 filings in the second quarter 2009.

The 1,306,315 total filings for the 12-month period ending June 30, 2009, represented a 35 percent increase from the same period in 2008, which totaled 967,831. The bankruptcy filing rate per thousand U.S. residents totaled 4.22 for all chapters during the 12-month period ending June 30, 2009, as 2.93 Americans per thousand filed for chapter 7 while 1.24 per thousand filed for chapter 13 bankruptcy.

Nevada was the state with the highest per capita filing rate in the country with 9.33 residents per thousand filing in all chapters, and also had the highest per capita filing rate for chapter 7 filings at 6.67. The state with the highest per capita filing rate for chapter 13 bankruptcy was Tennessee at 4.35 per thousand for the 12-month period ended June 30, 2009.

Nonbusiness filings for the 12-month period ending June 30, 2009, were up to 1,251,294, a 34 percent increase from the 934,009 total nonbusiness filings over the same period in 2008. Business filings for the 12-month period ending June 30, 2009, totaled 55,021, up 63 percent from the 33,822 bankruptcy petitions filed in the 12-month period ending June 30, 2008.

The 907,603 total chapter 7 filings for the 12-month period ending June 30, 2009, represent a 47 percent increase from the 615,748 filings from the same period in 2008. Total chapter 11 filings increased 91 percent to 13,951 in the 12-month period ending June 30, 2009 from 7,293 during the same period in 2008. Total chapter 13 filings also increased 12 percent to 384,187 in the 12-month period ending June 30, 2009, from 344,421 during the same period last year. Chapter 12 filings increased 34 percent from 314 in the 12-month period ending June 30, 2008 to 422 in 2009.

Chapter breakdowns of BUSINESS filings for the 3-month period ending June 30, 2009: 10,675 chapter 7s; 3,965 chapter 11s; 139 chapter 12s; and 1,175 chapter 13s.

Chapter breakdown of NON-BUSINESS filings for the 3-month period ending June 30, 2009: 265,368 chapter 7s; 383 chapter 11s; and 99,308 chapter 13s.

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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.