FOR IMMEDIATE RELEASE
Contact: Mana Zarinejad
2nd Quarter of 1998 Records
Highest Number of Bankruptcy Filings Ever
While Business Filings Drop ...
... Personal Bankruptcies Increase by More than 20,000 from 1st Quarter 98
August 11, 1998--ALEXANDRIA, Va.--Personal bankruptcies rose by 5.9
percent to 361,908 filings in the second quarter of 1998, up by more than 20,000 from the
first quarter of the year. Personal filings comprised 97 percent of all filings for the
second quarter, which broke the record for the highest number of bankruptcies ever in a
three-month period, according to statistics released by the Administrative Office of the
Total bankruptcy filings rose 5.5 percent for the quarter ending
June 30, 1998 to 373,460, surpassing the mark set by the 1997 second quarter results.
Conversely, business bankruptcies continued on their downward
spiral, dropping by 6.9 percent in the second quarter to 11,552 filings.
To date this year, there have been 727,578 total bankruptcy filings,
outpacing record filings in 1997. Bankruptcy filings surpassed 1.4 million in 1997, with
702,241 in the first half of the year.
Samuel J. Gerdano, executive director of the
American Bankruptcy Institute, said the dramatic increase in consumer filings can be
attributed to sustained high levels of household debt and a fear of the movement to pass
bankruptcy reform legislation on Capitol Hill this year. Debtors attorneys are
aware that the Bankruptcy Code may change dramatically in the next few months and may be
advising their clients to take advantage of the current law while it is still
available, Gerdano said.
Bankruptcy reform legislation has already passed the House of
Representatives this year (H.R. 3150) and awaits action on the Senate floor (S. 1301). The
main thrust of the pending legislation is to shift some debtors from Chapter 7 to Chapter
13, which would require debtors to repay some of their debts through future income.*
Gerdano said many debtors file for bankruptcy because they are
overextended and cant get out from under their debt. Gerdano also cited major
life-changing events, such as divorce, lay-offs and illness, as other causes. He said the
decrease in bankruptcys negative stigma and the abundance of credit are additional
variables that also contribute to high bankruptcy rates.
ABI is the largest multi-disciplinary, non-partisan and nonprofit
organization dedicated to research and education on matters related to insolvency. ABI was
founded in 1982 to provide its members, Congress, journalists and the public with unbiased
analysis of bankruptcy issues. The ABI membership includes more than 6,300 attorneys,
bankers, judges, lenders, professors, turnaround specialists, accountants and other
bankruptcy professionals providing a forum for the exchange of ideas and information. For
more information on ABI, visit ABI World at http://www.abiworld.org. And for information
and statistics collected specifically for the media, visit http://www.abiworld.org/media/media.html.
... One in every 70 U.S. households filed for bankruptcy in CY 1997.
... Total personal bankruptcies in CY 1997 were 1,350,118, a 49.9 percent
increase from CY 1992, the height of the Recession, when personal bankruptcies reached
... July 1, 1998 marked the 100th anniversary of the enactment of the
Bankruptcy Act of 1898, the law that made bankruptcy a permanent part of the U.S. Code.
The Act stood for 80 years before it was repealed by the Bankruptcy Reform Act of 1978.
The Act of 1898 brought forth the modern era of liberal debtor treatment in U.S.
bankruptcy law, by abolishing a number of restrictions on the availability of a debtor's
*Definitions from Bankruptcy Overview: Issues, Law and Policy,
published 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 and 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 reorganize an individuals finances through a court-approved
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 debtors future earnings under a plan through which creditors
are paid in whole or in part.
Top Ten Dsitricts With Highest Percentage Increases in Filings in the 12-Month
Period Ending June 30, 1998 Versus the Identical Period in 1997
|2 District of Utah
|3 District of "District of Columbia"
|4 Middle District of Pennsylvania
|5 District of Maine
|6 Eastern District of Oklahoma
|7 Northern District of Pennsylvania
|8 District of Idaho
|9 District of Maryland
|10 Southern District of Florida
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© August 11, 1998, American Bankruptcy Institute.
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