Contact:
Hartgen
(703) 739-0800
color='#0000ff'>jhartgen@abiworld.org
FIRST QUARTER
BANKRUPTCY FILINGS FALL TO LOWEST LEVELS SINCE 1985
May 26, 2006,
size='3'>Alexandria
w:st='on'>
size='3'>Va.
size='3'>The total number of
w:st='on'>
size='3'>U.S.
size='3'>bankruptcies filed during the first three months of 2006 were
the lowest on record in more than 20 years as filings fell to 116,771,
according to data released today by the Administrative Office of the
U.S. Courts. The total filings for the first calendar year quarter of
2006 (January 1-March 31, 2006) have not been experienced since the 1985
fourth calendar year quarter (October 1-December 31, 1985), when
bankruptcy filings totaled 114,021. The 2006 first quarter calendar year
filings also represent a 82.5 percent drop in filings from the previous
quarter (October 1-December 31, 2005) when 667,431 new cases were filed.
It is also represents a 70.89 percent drop compared to the 401,149 total
filings for the same three-month period ending March 31,
2005.
A new bankruptcy law went into
effect on October 17, 2005. The new law requires that consumers first go
through credit counseling before being eligible for bankruptcy. The new
law also reduces the scope of bankruptcy relief.
“Congress hoped the new
law would reduce the number of new consumer bankruptcies and the latest
figures reflect that intention, though there are still many families
under financial stress,” said Samuel J. Gerdano, ABI Executive
Director. “We haven’t seen numbers this low since the
mid-1980’s, when a gallon of gasoline was $1.20.”
Consumer filings represented
the largest drop-off as they decreased 82.79 percent to 112, 685 for the
three-month period ending March 31, 2006 from 654,633 the previous
three-month period ending December 31, 2005. They also represent a 71.33
percent decrease from the same period in 2005, which had a total of
393,086 nonbusiness filings.
Business filings for the
three-month period ending March 31, 2006 also experienced significant
decreases as the total of 4,086 filings were down 68.02 percent from the
2005 fourth quarter total of 12,798 and 49.32 percent from the 8,063
business cases filed in the same quarterly period of 2005.
However, total filings
increased for each month of the three-month period ending March 31,
2006, as nearly half of the total filings (44.26 percent) occurred in
the month of March with 51,683 filings. January 2006 totaled 28,368
filings, while 36,720 total filings were recorded for February 2006. The
steady increase was in stark contrast to the previous quarter’s
steep monthly drop due to the October 17, 2005, implementation of the
Bankruptcy Abuse Prevention and Consumer Protection Act of 2005
(BAPCPA). Filings fell from a high of 630,468 in October 2005 to 14,480
for November 2005 and 22,927 for December 2005.
The total filings for the
12-month period ending March 31, 2006 were sustained by the surge of
debtors filing for bankruptcy before the October 2005 implementation of
BAPCPA. Total filings rose 12.81 percent to 1,794,795 compared to
1,590,975 bankruptcy cases filed in the 12-month period ending March
2005. Prior to the March 2006 12-month reporting period, bankruptcy
filings rose 30 percent in the 12-month period ending December 31, 2005,
which was also attributable to the rush prior to BAPCPA’s
implementation.
Nonbusiness filings for the
12-month period ending March 31, 2006, totaled 1,759,503, up 12.86
percent from the 1,559,023 total nonbusiness filings in the 12-month
period ending March 31, 2005. Business filings for the 12-month period
ending March 31, 2006, totaled 35,292, up 10.45 percent from the 31,952
bankruptcy petitions filed in the 12-month period ending March 31,
2005.
Chapter 7 filings rose to
1,432,074 for the 12-month period ending March 31, 2006, representing a
25.43 percent increase from the 1,141,715 filings from the same period
in 2005. Chapter 13 filings fell 19.48 percent, to 355,756 in the
12-month period ending March 31, 2006 from 441,838 in the same period
last year. Chapter 11 filings also declined, falling 8.69 percent to
6,497 in 2006 from 7,115 in 2005. Chapter 12 filings rose 93.65 percent
from 189 in 2005 to 366 in 2006.
size='3'>BUSINESS FILINGS for the 3-month
period ending March 31, 2006, totaled 4,086, down 49.32 percent from the
8,063 bankruptcy business cases filed in the same period in 2005.
NON-BUSINESS FILINGS
for the 3-month period ending March 31, 2006, decreased
71.33 percent from 393,086 in 2005 to 112,685 in 2006.
The chapter* breakdown
of BUSINESS
filings for the 3-month period ending March 31, 2006, is:
2,147 chapter 7s, 1,291 chapter 11s, 84 chapter 12s and 540 chapter
13s.
The chapter breakdown
of
size='3'>NON-BUSINESS filings for the 3-month
period ending March 31, 2006, is: 63,250 chapter 7s, 121 chapter 11s and
49,314 chapter 13s.
Districts with the Highest
Percentage INCREASE in Total Filings for the 12-month period ending
March 31, 2006 (compared to the identical period in
2005):
- District of Vermont:
39.76%
- Northern District of Indiana:
35.86%
- District of Alaska:
35.10%
size='3'>
- Northern District of Ohio:
33.76
- Western District
of
w:st='on'>Oklahoma
Districts with the Highest
Percentage DECREASE in Total Filings for the 12-month period ending
March 31, 2006 (compared to the identical period in
2005):
- Southern District of Georgia:
19.32%
- Middle District
of
face='Times New Roman'
size='3'>Georgia
17.14%
- Southern District of
Alabama: 15.02%
- District of South
Carolina: 14.93%
size='3'>
- District of Utah:
12.05%
###
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
face='Times New Roman' color='#0000ff'
size='3'>http://www.abiworld.org/conferences.html
face='Times New Roman' size='3'>.
size='3'>*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.
size='3'>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.
size='3'>Chapter 12 of the Bankruptcy
Code is designed to give special debt relief to a family farmer with
regular income from farming.
size='3'>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.