Contact: John Hartgen
(703) 739-0800
2006
BANKRUPTCIES FALL TO LOWEST LEVELS SINCE 1980s
size='3'>April 17, 2007
size='3'>—Bankruptcy filings in the
w:st='on'>
size='3'>United States
size='3'>dropped to their lowest level since 1988 as calendar year 2006
filings plunged following the implementation of the new bankruptcy law
in 2005, according to data from the Administrative Office of the U.S.
Courts (AOUSC). One year after the Bankruptcy Abuse Prevention and
Consumer Protection Act of 2005 (BAPCPA) was implemented on Oct. 17,
2005, total bankruptcy filings for calendar year 2006 dropped to
617,660, representing the lowest filing total since 613,465 total
filings were recorded for the 12-month period ending Dec.31, 1988. The
total filings for the 12-month period ending Dec. 31, 2006, represent a
70.28 percent decrease compared with the record total of 2,078,415
filings for the same period in 2005.
Consumer bankruptcies
recorded the sharpest decrease; the 597,965 consumer filings during
calendar year 2006 represented a 70.68 percent drop in filings from the
record 2,039,214 filings made during the 12-month period ending Dec. 31,
2005. The 12-month filing total for 2006 was the lowest since the
549,612 filings were recorded for the
size='3'>12-month period ending Dec. 31,
1988.
'The final government
statistics merely confirm what all in the bankruptcy world had already
experienced: a historic drop-off in 2006 activity almost entirely due to
the after-effect of the 2005 law changes,' said ABI Executive Director
Samuel J. Gerdano. 'But as the debt burden on the household sector
remains high, most expect consumer bankruptcies to bounce back by the
end of this year,' he said.
While the number of
consumer filings reached their lowest point since 1988, the 2006
calendar year consumer filings revealed a noticeable shift in the type
of bankruptcies being filed by consumers. Largely the result of stricter
requirements under BAPCPA, the 248,430 chapter 13
cases filed for the 12-month period ending Dec. 31, 2006, represented
41.55 percent of the overall consumer filing total. The 349,012
consumers who filed for chapter 7 during the 12-month period ending Dec.
31, 2006, comprised 58.37 percent of the total consumer filings for the
2006 calendar year. The filing pattern was vastly different from 2005,
when there were 1,631,011 chapter 7 cases filed, representing 79.98
percent of total bankrupt consumer filings, while only 19.97 percent of
consumer cases, representing 407,322 filings, were filed under chapter
13 during the 12-month period ending Dec. 31, 2005.
The 19,695 business filings
during the 12-month period ending Dec. 31, 2006, were the lowest on
record under the current statistics reporting system, which was
implemented in 1980. The previous lowest business filing total for a
12-month period was recorded in 2004, with 34,317 business bankruptcies
filed. The 2006 filing total also represents 49.78 percent decrease from
the 39,201 business bankruptcy filings during the 12-month period ending
Dec. 31, 2005.
The 177,599 total bankruptcies
recorded during the 4th calendar quarter of 2006 (Oct.1-Dec. 31, 2006)
represent a 73.39 percent drop from the 667,431 filings during the
similar period in 2005. Total filings for the month of October
registered a 90.23 percent drop from 2005 as 61,592 filings were
recorded for the month in 2006 as compared to the 630,497 cases that
were filed in October 2005 leading up to the implementation of BAPCPA
that year. Despite the drop-off from the previous year, the 2006 4th
calendar quarter filing total was the highest of any previous quarter
for 2006 and represented a 3.63 percent increase over the 3rd quarter
(July 1 – Sept. 30) total of 171,146.
The 172,013 consumer filings in
the 4th quarter of 2006 represent a 73.72 percent decrease in comparison
to the 654,633 consumer filings for the same quarter of 2005. The
consumer filing total for the 4th calendar quarter did, however,
represent a 3.58 percent increase from the previous total of 165,862
filings from the 3rd quarter of 2006.
Business filings, which totaled
5,586 for the 4th calendar quarter of 2006, represented a 56.35 percent
decrease from the 12,798 filed in the same 3-month period in 2005 (Oct.
1-Dec. 31). Business filings did rise from the previous quarter as the
4th calendar quarter represented a 5.41 percent increase over 5,284
business filings reported during the 3rd quarter of 2006 (July 1- Sept.
30).
The chapter* breakdown
of BUSINESS
filings for the 3-month period ending Dec.31, 2006, is
3,567 chapter 7s, 1,170 chapter 11s, 74 chapter 12s and 763 chapter
13s.
The chapter breakdown
of
size='3'>NONBUSINESS filings for the 3-month
period ending Dec. 31, 2006, is 98,824 chapter 7s, 134 chapter 11s and
73,052 chapter 13s.
Districts with the LOWEST PERCENTAGE
DECREASE in Total Filings for the 12-month period ending Dec. 31, 2006
(compared to the identical period in 2005):
- Western District
of
size='3'>: 45.29% - Southern District
of Georgia: 46.49% - District of the
Mariana Islands
46.88% - Northern District
of Georgia: 51.22% - Middle District
of
size='3'>: 51.68%
Districts with the HIGHEST PERCENTAGE
DECREASE in Total Filings for the 12-month period ending Dec. 31, 2006
(compared to the identical period in 2005):
- Eastern District of Louisiana:
85.14%
- Southern District of West
Virginia: 84.01% - Eastern District of Oklahoma:
83.75% - Western District
of
size='3'>: 81.79% - Northern District of West
Virginia: 81.21%
More information will be
available at
href='http://www.abiworld.org/Content/NavigationMenu/Online_Resources/Bankruptcy_Statistics/ABI_-_Bankruptcy_Statistics.htm'>
face='Times New Roman' color='#0000ff' size='3'>ABI’s Statistics
Page,
href='http://www.abiworld.org/statistics'>
color='#0000ff'
size='3'>http://www.abiworld.org/statistics
face='Times New Roman' size='3'>.
###
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.
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.