Bankruptcy Filings Set Record in 2001

Feb. 19, 2002, Alexandria, Va. — The number of new bankruptcies filed during calendar year 2001 rose to a historic high of 1,492,129 cases, a 19 percent increase from the 1,253,444 cases filed in 2000 and a 3.4 percent increase from the 1,442,549 cases filed in 1998, according to data released today by the Administrative Office of the U.S. Courts. The previous record was set in 1998. The total number of new bankruptcies filed in the fourth quarter of 2001 (Oct. 1 to Dec. 31) was 364,921, an 18 percent increase over the same period a year ago and the highest fourth quarter ever.

In 2001, the largest number of filings continues to be under chapter 7. Total chapter 7 filings were 1,054,975, a 23 percent increase from 859,220 in 2000. Chapter 13 filings, the next largest category, increased by 11 percent from 383,894 for the same period in 2000 to 425,292. Chapter 11 filings rose 16 percent from 9,884 to 11,424, spurred by a record number of large public company filings. Chapter 12 filings fell 6 percent from 407 to 383. Chapter 12 expired on Oct. 1, 2001.

“As predicted, 2001 was a boom year for bankruptcies,” said Samuel J. Gerdano, Executive Director of the American Bankruptcy Institute. “The combination of record levels of consumer debt and an economic downturn beginning in 2000 caused more families to face financial stress than ever before,” he said.

Of the total number of bankruptcy filings for the 3-month period ending Dec. 31, there were 250,298 chapter 7 filings, a 19.4 percent increase from 209,473 chapter 7 bankruptcies filed in the same period in 2000. The next largest group of filings is chapter
13, which increased by 13.2 percent from 98,403 to 111,416. Chapter 11 filings increased 40 percent from 2,269 to 3,171. Chapter 12 increased by 31 percent from 13 cases filed in the fourth quarter 2000 to 17 cases filed in the same period in 2001.

Business filings for the 12-month period ending Dec. 31 totaled 40,099, the highest number since 1998 and up 13 percent from the 35,472 bankruptcy business cases filed in 2000. Non-business filings increased 19.2, from 1,217,972 in 2000 to 1,452,030 in 2001.

The chapter* breakdown of NON-BUSINESS filings for the 12-month period ending Dec. 31, 2001, is: 1,031,493 chapter 7s, 783 chapter 11s, and 419,750 chapter 13s.

The chapter breakdown of NON-BUSINESS filings for the 3-month period ending Dec. 31, 2001, is: 244,590 chapter 7s, 212 chapter 11s, and 110,106 chapter 13s.

Districts with the Highest Percentage INCREASE in Total Filings for the 12-month period ending Dec. 31, 2001 (compared to the identical period in 2000)

1. District of Guam 86%

2. District of the Northern Mariana Islands 73.3%

3. Southern District of Iowa 37%

4. Northern District of Indiana 34%

4. Northern District of Ohio 32.1%

Districts with the Highest Percentage DECREASE in Total Filings for the 12-month period ending Dec. 31, 2001 (compared to the identical period in 2000)

1. District of Delaware 9.3%

2. District of Puerto Rico 4%

More information will be available tomorrow at http://www.abiworld.org/stats/newstatsfront.html.

ABI is the largest multi-disciplinary, non-partisan 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 8,500 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 ABI World at http://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 12 expired on Oct. 1, 2001.

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 creditors are paid in whole or in part.

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