Second Quarter 2000 Shows Bankruptcy Filings Still Dropping

August 14, 2000, Alexandria, Va. — The total number of new bankruptcies filed during the second quarter of 2000 dropped to 321,729, posting the lowest number of filings in the second quarter since 1996, according to data released from the Administrative Office of the U.S. Courts.

Filings in the 12-month period ending June 30 totaled 1,276,922, which is an 8.3 percent decrease from the previous 12-month period of 1,391,964 bankruptcies. Personal bankruptcies for the quarter decreased to1,240,012 (down 8.3 percent when compared to the second quarter of 1999), and personal filings for the 12-month period ending June 2000 decreased 10.9 percent over the 993,414 filings in the same period for 1999.

Non-business or personal filings also dropped from 1,352,030 in 1999 to 1,240,012 in 2000, or an 8.3 percent decrease. Business filings were down from 39,934 to 36,910, which is a 7.6 percent decrease.

Despite the drop, bankruptcy filings nationwide remain above one million. Since June 1996, total bankruptcy filings have increased 22.5 percent and non-business filings have increased over 25 percent. In that same time, however, business bankruptcy filings have declined over 30 percent. The only chapter to show an increase was chapter 11, under which filings rose 14.5 percent from 8,684 in June 1999 to 9,947 in June 2000.

“The continued drop in bankruptcy filings reflects the positive impact that our strong economy has had on household balance sheets. Still, more than 1.2 million annual new filings present a strain on the bankruptcy system, which Congress should address by increasing the number of bankruptcy judges,” said Samuel J. Gerdano, Executive Director of the American Bankruptcy Institute.

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Legislation is pending to add 23 judges in various heavy caseload districts around the country. The legislation is included in omnibus bankruptcy reform legislation that has been held up in the Senate since February.

The chapter* breakdown of personal filings for the 12-month period ending June 30 is: 864,183 chapter 7s; 772 chapter 11s; and 375,107 chapter 13s. Chapter 7 bankruptcies represent 69.6 percent of all personal bankruptcies during the 12-month period.

The chapter breakdown of personal filings for the second quarter is: 317,486 chapter 7s; 181 chapter 11s; and 92, 368 chapter 13s. Chapter 7 bankruptcies represent 77.4 percent of all personal bankruptcy filings during the quarter.

ABI is the largest multi-disciplinary, non-partisan organization dedicated to research and education on matters of insolvency. ABI is not an advocacy group. Instead, ABI was founded in 1982 to provide Congress, its members, journalists and the public-at-large with an unbiased analysis of bankruptcy issues. ABI’s membership includes more than 7,500 attorneys, bankers, judges, lenders, professors, turnaround specialists, accountants and other bankruptcy professionals providing a forum of the exchange of ideas and information. For additional information visit ABI World at http://www.abiworld.org.

*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 whatever non-exempt property the debtor has to give the individual debtor a fresh start through the discharge in bankruptcy.

Chapter 11 of the Bankruptcy Code is available for both consumer and business debtors. Its purpose is to rehabilitate a business as a going concern or recognize 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, 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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