Bankruptcy Filings Surpass Record Breaking Mark

December 4, 2001, Alexandria, Va. — The number of new bankruptcies filed during fiscal year 2001 rose to a historic high during the 12-month period ending Sept. 30. Bankruptcy cases for FY 2001 totaled 1,437,354, which is a 14 percent increase from the 1,262,102 cases filed in FY 2000, according to data released today by the Administrative Office of the U.S. Courts. The total number of new bankruptcies filed in the third quarter of 2001 (July 1 to Sept. 30) was 359,518, a 16.5 percent increase over the same period a year ago. This is the second highest third quarter ever and is surpassed only by the third quarter of 1998 when 361,205 new cases were filed. Through the first nine months of this year, filings are up 19.5 percent from the same period a year ago and up 3.5 percent from the same period in 1998. Filings are now on their way to surpass the recording-breaking year of 1998, when 1,442,549 new cases were filed.

In fiscal year 2001, the largest number of filings continues to be under chapter 7. Total chapter 7 filings were 1,014,137, a 16.5 percent increase from 870,805 in 2000. Chapter 13 filings, the next largest category, increased by 8.2 percent from 380,880 for the same period in 2000 to 412,272. Chapter 11 filings rose 7 percent from 9,835 to 10,519 and chapter 12 filings fell 31.2 percent from 551 to 379. Overall, chapter 12 filings fell during this period. Chapter 12 expired on Oct. 1, 2001.

“Today’s filing statistics confirm that we will set a new record for bankruptcies in 2001,” said Samuel J. Gerdano, Executive Director of the American Bankruptcy Institute. “Hangover consumer debt from the free-spending ‘90s and a weakened economy today mean more families will face the need to file for protection well into next year,” he added.

Of the total number of bankruptcy filings for the 3-month period ending Sept. 30, there were 250,400 chapter 7 filings, a 20 percent increase from 208,889 chapter 7 bankruptcies filed in the same period in 2000. The next largest group of filings is chapter 13, which increased by 9 percent from 97,609 to 106,475. Chapter 11 filings increased 11.5 percent from 2,190 to 2,442.

The chapter* breakdown of NON-BUSINESS filings for the 12-month period ending Sept. 30, 2001, is: 991,337 chapter 7s, 732 chapter 11s, and 406,791 chapter 13s.

The chapter breakdown of NON-BUSINESS filings for the 3-month period ending Sept. 30, 2001, is: 244,713 chapter 7s, 168 chapter 11s, and 105,100 chapter 13s.

Districts with the Highest Percentage INCREASE in Total Filings for the 3-month period ending Sept. 30, 2001 (compared to the identical period in 2000)

District of Guam 70%
Southern District of Iowa 38.5%
District of South Dakota 35.2%
Western District of North Carolina 34.7%
Western District of Missouri 33.7%

Districts with the Highest Percentage DECREASE in Total Filings for the 3-month period ending Sept. 30, 2001 (compared to the identical period in 2000)

District for Northern Mariana Islands 33.3%
District of Puerto Rico 10%
District of Delaware 2.6%
District of Alaska 2.5%

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 8,000 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 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 June 30, 2000, and was not reenacted until June 26, 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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