BANKRUPTCY FILINGS INCREASE 27 PERCENT IN RECORD-SETTING 1996 AS
PERSONAL BANKRUPTCIES CONTINUE TO TOP ONE MILLION
Contact: Scott Relyea
or Michele Parisi
at (703) 739-0800
March 18, 1997 --
Closing a year that saw numerous records set for bankruptcy
filings, 1,178,555 bankruptcy petitions were filed by both businesses and consumers during 1996,
according to official bankruptcy statistics released today by the Administrative Office of the U.S.
Courts. This plateau represents a 27.2 percent increase over total bankruptcy filings for calendar year
1995, which stood at 926,601.
Consumer bankruptcy filings continued to drive the increase, as more than 95 percent of total
filings, or 1,125,006, were by individuals. This represents an increase in non-business filings of 28.6
percent over 1995. By contrast, the 53,549 business filings for 1996 marks only a 3 percent increase
over business filings for 1995.
Total bankruptcy filings in the United States have more than doubled during the past decade, with
only 530,436 petitions filed in 1986. Consumer filings for 1986 stood at nearly 450,000,
approximately 85 percent of the total for that year.
"The recent numbers represent a systemic problem within both the bankruptcy system and the
economy as a whole," noted Richardo I. Kilpatrick, of the Michigan firm of Shermeta,
Chimko & Kilpatrick P.C., who is an ABI director and chair of its Consumer Bankruptcy Committee.
"The beat goes on."
The fourth quarter of 1996 marks the second consecutive quarter that total filings for a single
three-month period averaged more than 100,000 per month, as 311,131 bankruptcy petitions were
filed from October 1 through December 31, 1996, and the fifth consecutive quarter to register an
increase in filings.
Of the more than one million consumer bankruptcy filings, 779,741 petitions, or 69.3 percent,
were filed under chapter 7 of the Bankruptcy Code. Chapter 7 affords an individual debtor a "fresh
start," as his or her unsecured debt is discharged and the individual debtor is allowed to retain some
exempt property, while the remaining assets are sold and distributed to secured creditors.
Commenting on the correlation between rising consumer debt levels and the increase in
bankruptcy filings, Samuel J. Gerdano, ABI Executive Director, noted, "The alarm bells
continue to sound for the financial community and policy makers alike." According to the Federal
Reserve, payments on consumer debt during 1996 stood at approximately 17 percent of disposable
For the fourth consecutive quarter, every state in the country saw an increase in total filings over
the previous 12-month period, with only the District of the Northern Mariana Islands among the 93
judicial districts recording a drop. Total filings increased by more than half from 1995 to 1996 in
three districts: District of Guam (60.4 percent), District of Hawaii (51.9 percent) and Middle District
of Louisiana (50.4 percent).
Once again the Central District of California reported the greatest number of total bankruptcy
filings, at 102,645. Marking a 24.7 percent increase over 1995, this number is more than double the
filings recorded in 1986, at approximately 47,000.
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 5,400
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 http://www.abiworld.org.
For information and statistics collected especially for the media and other researchers, visit http://www.abiworld.org/media/media.html.
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