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Bankruptcies Increased by 19 Percent in 1997 to a Record High of 1.4 Million Filings

Contact: Mana Zarinejad
at (703) 739-0800

ALEXANDRIA, Va., March 2, 1998 — -- Bankruptcy filings for calendar year 1997 increased by 19.1 percent to a record high of 1,404,145 filings, compared to 1,178,555 in 1996.

The statistics were released Friday by the Administrative Office of the U.S. Courts.

The record number of filings is driven by consumer filings, which comprised more than 96 percent of all filings in 1997. Last year, consumer or non-business filings rose to a record high of 1,350,118 filings, a 20 percent increase from 1996. By contrast, business filings rose to 54,027, only about 1 percent up from 1996.

When broken down by chapter,* there were 989,372 chapter 7 filings, an increase of 22 percent over 1996 figures. Chapter 13 filings increased by 13.5 percent in 1997 to 403,025 filings. Chapter 11 filings decreased by 9.6 percent in 1997 to 10,765 filings. Chapter 12 filings also decreased in 1997, down 14 percent to 949 filings. "The sustained growth in consumer bankruptcy filings correlates to rising levels of household debt," said Samuel J. Gerdano, executive director of the American Bankruptcy Institute. "The numbers have startled many in Congress, who intend to examine whether changes in current law are necessary."

Congressional hearings on the state of bankruptcy and legislation aimed at reform of the bankruptcy laws are scheduled to start in March.

Nationwide, out of 94 federal judicial districts, the Central District of California remained the district reporting the greatest number of filings, 118,335 for 1997, a 15.3 percent increase over 1996. In addition, districts reporting more than 30,000 total filings were: the District of New Jersey, the District of Maryland, the Eastern District of Virginia, the Northern District of Illinois, the Northern and Eastern Districts of California, the Middle District of Florida and the Northern District of Georgia.

Only two districts reported a decline in filings in 1997: the Southern District of Alabama and the Northern Mariana Islands.

The 10 districts posting the greatest percentage increase among the 50 states from 1996 to 1997 are the Northern District of West Virginia (45.9%), the District of Hawaii, the Middle District of Pennsylvania (40.4%), the District of Vermont (39.7%), the Southern District of West Virginia (39.5%), the District of Maine (37.3%), the District of Massachusetts (34.6%), the Western District of Pennsylvania (34.1%), the District of New Hampshire (32.8%) and the District of Maryland (31.4%).

*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 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 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.

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 5,700 attorneys, bankers, judges, 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

For information and statistics collected especially for the media and other researchers, visit

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Copyright © 1997 American Bankruptcy Institute.
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