Contact:
Hartgen
Phone: 703-739-0800
Email: jhartgen@abiworld.org
Total Bankruptcies
Eclipse the 2 Million Mark in 2005 as Consumers File in Record Numbers
Prior to Implementation of New Bankruptcy Law
March 24, 2006 Alexandria, Va.
— Bankruptcy filings eclipsed the two million mark for the first
time in the
States
reported in calendar year 2005, according to data from the
Administrative Office of the U.S. Courts. The total in this 12-month
period ending December 31, 2005, represents a record 30 percent increase
compared with the 1,597,462 total filings for the same period in
2004.
Driven largely in response to the
passage of the Bankruptcy Abuse Prevention and Consumer Protection Act
(BAPCPA), consumers provided 98 percent of the overall total filings,
the highest concentration of consumer filings on record, as nonbusiness
filings during the 12-month period ending December 31, 2005, increased
to a record 2,039,214, which was a 31 percent increase from the total of
1,563,145 of the same period in 2004. Business filings also increased to
39,201 for the 12-month period ending December 31, 2005, representing a
14 percent increase from the total of 34,317 from same period in 2004.
This is the highest total of business bankruptcies in a calendar year
since 2001’s total of 40,099.
“It is ironic that,
at least in the short term, a law Congress hoped would reduce
bankruptcies instead caused the largest upward spike in history,”
said Samuel J. Gerdano, ABI Executive Director.
size='3'> “Bankruptcies have in fact
fallen dramatically so far in 2006 under the new, more-restrictive
law,” he added.
The record high of 667,431 bankruptcies
recorded during the 4th calendar quarter of 2005 (October 1-December 31,
2005), is representative of the many debtors who rushed to file prior to
the Oct. 17 implementation date of BAPCPA. October 2005 filings alone
totaled 630,497, representing 95 percent of the filings for the
three-month period and 30 percent of the 12-month period ending December
31, 2005. Nonbusiness filings in October 2005 reached 619,588, which
represented 30 percent of the nonbusiness filings for the 12- month
period ending December 31, 2005, and 95 percent of the 654,633 total
nonbusiness filings for the 4th quarter of 2005. The 10,909
October business filings were representative of 28 percent of the
12-month period ending December 31, 2005 business filings and 85 percent
of the 12,798 business filings for the 4th quarter
2005.
Largely as a result of the BAPCPA,
dramatic decreases in filings were seen during the months of November
and December 2005 as the combined filings of 36,934 for those two months
represented just 1.78 percent of the total 12-month period ending
December 31, and 6 percent for the 4th quarter 2005.
November’s total filings dropped to 14,324, which represented less
than one percent (0.69%) of the total for the 12-month period ending
December 2005 and 2 percent of the 4th quarter total. The
total of 13,643 nonbusiness filings in November was representative of
less than one percent of the total nonconsumer filings (0.67%) for the
12-month period ending December 31, 2005 and just 2 percent of the
4th calendar quarter nonbusiness filings. Business filings
experienced a similar decline as the 681 filings in November represented
less than 2 percent (1.74%) for CY2005 and 5 percent of the 2005
4th quarter’s total of 12,798. By comparison, 2004
totals for the month of November were 122,796 total filings, 2,643
business filings and 120,153 nonbusiness filings, each representative of
nearly 8 percent of the 12-month total for their respective
categories.
Total filings increased in December 2005
to 22,610, which represented a 63 percent increase over November total
filings, but just over 1 percent of the 12-month period ending December
31, 2005 total (1.09%) and just over 3 percent (3.39%).for the
4th quarter 2005. December nonbusiness filings reached
21,402, representing just over one percent (1.05%) of the total
nonbusiness filings for the 12-month period ending December 31, 2005,
and only 3 percent of the 4th quarter 2005 nonbusiness
filings. December business filings increased as well to 1,208, but only
comprised 3 percent of the total business filings for the 12-month
period and represented just over 9 percent of the 4th quarter
total business filings. By comparison, 2004 totals for the month of
December were 118,193 total filings, 2,493 business filings and 115,700
nonbusiness filings. Each was representative of just over seven percent
of the 12-month total for their respective categories.
However, the 667,431 filings in the
4th quarter of 2005 (October 1-December 31, 2005) represent
an 80 percent increase in comparison to the 371,668 filings for the same
quarter of 2004 (October 1-December 31, 2004) and a 23 percent increase
from the previous record total 542,002 from the 3rd quarter
of 2005 (July 1- September 30, 2005).
Of the total number of bankruptcy
filings in the 12-month period ending December 31, 2005, there were
1,659,017 chapter 7 filings, a 46 percent increase over the 1,137,958
chapter 7 filings for the same period in 2004. Chapter 7 filings also
increased 33 percent from the 2005 third quarter from 429,299 to 570,355
in the 2005 fourth quarter.
The next-largest group of filings in the
12-month period ending December 31, 2005, was chapter 13 at 412,130, a 9
percent decrease from the 449,129 filings in the 12-month period ending
December 31, 2004. CY2005 chapter 12 filings totaled 380, a 252 percent
increase from the 108 filings in the 12-month period ending December 31,
2004. Reflecting the strong economy and low interest rates, chapter 11
filings fell from 10,132 in CY2004 to 6,800 in the 12-month period
ending December 31, 2005, a 33 percent decrease.
BUSINESS FILINGS for the
size='3'>3-month period ending December 31, 2005, totaled 12,798,
a 64.54 percent increase from the 7,778 bankruptcy business cases filed
in the same period in 2004. NONBUSINESS FILINGS for the
3-month period ending September 30, 2005, totaled
654,633, an 80 percent increase from the 363,890 total in the same
quarter in 2004.
The chapter* breakdown of
size='3'>BUSINESS filings for the 3-month period ending December
31, 2005, is: 9,701 chapter 7s, 1,692 chapter 11s, 87 chapter 12s and
1,308 chapter 13s.
The chapter breakdown of
size='3'>NONBUSINESS filings for the 3-month period ending
December 31, 2005, is 560,654 chapter 7s, 263 chapter 11s and 93,714
chapter 13s.
Districts with the Highest Percentage
INCREASE in Total Filings for the 12-month period ending December 31,
2005 (compared to the identical period in 2004):
- District of Virgin Islands:
68.42% - Northern District
of Ohio: 57.47% - Southern District of West
Virginia: 57.02% - District of North Dakota:
54.68% - District of Vermont:
54.42%
Districts with the Highest Percentage
DECREASE in Total Filings for the 12-month period ending December 31,
2005 (compared to the identical period in 2004):
- Southern District of Georgia:
9.79% - Middle District
of
face='Times New Roman'
size='3'>Georgia
6.67% - District of Puerto Rico:
0.82% - District of South Carolina:
0.47% (Increase) - Middle District
of
size='3'>: 4.19% (Increase)
More information will be available
at
href='/AM/Template.cfm?Section=Bankruptcy_Statistics&Template=/Content/NavigationMenu/News_Room/Bankruptcy_Statistics1/Bankruptcy_Filings_Statistics.htm'>
face='Times New Roman'>ABI’s Statistics Page
face='Times New Roman'>,
href='/statistics'>http://www.abiworld.org/statistics.
###
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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 11,000 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
href='/Content/NavigationMenu/MeetingsEvents/UpcomingEvents/Events_Intro_Page1.htm'>http://www.abiworld.org/conferences.html
face='Times New Roman'>.
*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.