Contact: Rali Mileva    
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Bankruptcy Growth Rate Slowed In First Quarter

May 21, 2004, Alexandria, Va.--Bankruptcy filings in the federal courts rose 2.7 percent in the 12-month period ending March 31, 2004, according to data released today by the Administrative Office of the U.S. Courts. Bankruptcy filings rose from 1,611,268 in the 12-month period ending March 2003 to 1,654,847 in the same time period in 2004. The number of filings, however, was 0.4 percent down from the record 1,661,966 bankruptcy cases filed during fiscal year 2003, the 12-month period ending September 30. Bankruptcy filings typically lag general economic conditions by 12-18 months.

Non-business filings for March 2004 totaled 1,618,062, up 2.8 percent from the total non-business filings of 1,573,720 filings in the 12-month period ending March 31, 2003. Business filings in March 2004 totaled 36,785, down 2.0 percent from the 37,548 business filings in the 12-month period ending March 31, 2003.

“Consumer bankruptcies continued their upward arc, though at a slower pace to start this year", said Samuel J. Gerdano, executive director of the American Bankruptcy Institute.  "The continued decline in business bankruptcies reflects an improved economic climate for business, aided by sustained low interest rates", he added.

The number of bankruptcies filed during the second quarter of the fiscal year 2004 (January1, 2004 -March 31, 2004) was 407,572. That is up 3.6 percent up from the 393,348 filings for the first quarter of fiscal year 2003 (October 1, 2003 -December 31, 2003). However, this number is down 1.3 percent from the 412,968 filings in the second quarter of the fiscal year 2003 (January1, 2003 -March 31, 2003).

Filings increased under all bankruptcy chapters, except chapter 12. Chapter 7 filings increased 3.6 percent, from 1,135,436 in 2003 to 1,176,654 in the 12-month period ending March 31, 2004. Chapter 13 filings rose 0.3 percent, from 464,369 at the end of March 2003 to 465,878 in 2004. Chapter 11 filings rose 8.6 percent, from 10,722 in 2003 to 11,649 in 2004. Only Chapter 12 filings fell, dropping 9.3 percent from 632 in March 2003 to 573 in March 2004.

BUSINESS FILINGS for the 3-month period ending March 31, 2004, totaled 10,566, up 19.9 percent from the 8,814 bankruptcy business cases filed in the same period in 2003. NON-BUSINESS FILINGS for the 3-month period ending March 31, 2004 decreased 1.8 percent from 404,154 in 2003 to 397,006 in 2004.

The chapter* breakdown of BUSINESS filings for the 3-month period ending March 31, 2004, is: 290,689 chapter 7s, 4,735 chapter 11s, 18 chapter 12s and 112,101 chapter 13s.

The chapter breakdown of NON-BUSINESS filings for the 3-month period ending March 31, 2004, is: 285,787 chapter 7s, 280 chapter 11s and 110,939 chapter 13s.

Districts with the Highest Percentage INCREASE in Total Filings for the 12-month period ending March 31, 2004 (compared to the identical period in 2003):

1. Southern District of New York 20.8%
2. District of Colorado 18.5%
3. Northern District of Oklahoma 16.2%
4.   Western District Pennsylvania 12.8%
5. Western District of Louisiana 12.5%

Districts with the Highest Percentage DECREASE in Total Filings for the 12-month period ending March31, 2004 (compared to the identical period in 2003):

1. District of Northern Mariana Islands 28.6%
2. District of Virgin Islands 13.3%
3. District of Hawaii 12.2%
4. Central District of California 12.2%
5. District of Columbia 10.4%

More information will be available on Monday at ABI World

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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 10,250 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. 

*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 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 unsecured creditors are paid in whole or in part.