Second Quarter Bankruptcy Filings Highest in History

August 24, 2005, Alexandria, Va. – Quarterly filings for the period from April 1, 2005, to June 30, 2005, reached the highest number of single-quarter filings in history, and rose 11.0 percent when compared to the same period in 2004, the Administrative Office of the U.S. Courts announced today. This quarter is the first since the new Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) was enacted on April 20. Although the total number of bankruptcies filed in federal courts remained stable in the 12-month period ending June 30, 2005, rising only 0.1 percent, these new filing statistics are the beginning of what is expected to be a trend in the third quarter, as well.

During the second quarter of 2005, which includes almost three weeks preceding the BAPCPA enactment on April 20, 467,333 bankruptcies were filed. That is an increase of more than 66,000 cases when compared to first quarter 2005 filings totaling 401,149.

The overall quarterly increase was primarily fueled by a surge in chapter 7 filings. Chapter 7 filings rose 17.7 percent, from 308,028 during the third quarter of the Judiciary's 2004 fiscal year to 362,481 during the third quarter of the 2005 fiscal year.

“We are seeing the effect of consumers rushing to file now, in order to avoid the impact of the new law,” said Samuel J. Gerdano, Executive Director of the American Bankruptcy Institute. “We expect this trend to continue into the third quarter as well, ahead of October 17, when the law will be fully implemented.”

The number of bankruptcy cases filed in the 12-month period ending June 30, 2005, totaled 1,637,254, up 0.1 percent from the 1,635,725 bankruptcy cases filed in the 12-month period ending June 30, 2004. Non-business filings for the period totaled 1,604,848, up 0.3 percent from the 1,599,986 non-business filings during the 12-month period ending June 30, 2004. In the 12-month period ending June 30, 2005, business filings dropped to 32,406 down 9.3 percent from 35,739 filings reported in the previous 12-month period.

Of the total number of bankruptcy filings in the 12-month period ending June 30, 2005, there were 1,196,212 chapter 7 filings, a 2.5 percent increase over the 1,167,101 chapter 7 filings for the same period in 2004. The next largest group of filings was chapter 13 filings at 443,945, a 2.9 percent drop from the 457,171 filings in the 12-month period ending June 30, 2004. Chapter 12 filings totaled 290, a 4.0 percent drop from the 302 filings in the 12-month period ending June 30, 2004. Chapter 11 filings also fell, from 11,048 in June 2004 to 6,703 in the 12-month period ending June 30, 2005.

BUSINESS FILINGS for the 3-month period ending June 30, 2005, totaled 8,736, up 6.0 percent from the 8,249 bankruptcy business cases filed in the same period in 2004. NON-BUSINESS FILINGS for the 3-month period ending June 30, 2005, increased 11.1 percent, from 412,861 in 2004 to 458,597 in 2005.

The chapter* breakdown of BUSINESS filings for the 3-month period ending June 30, 2005, is: 6,092 chapter 7s, 1,384 chapter 11s, 109 chapter 12s and 1,125 chapter 13s.

The chapter breakdown of NON-BUSINESS filings for the 3-month period ending June 30, 2005, is: 356,389 chapter 7s, 190 chapter 11s and 102,017 chapter 13s.

Districts with the Highest Percentage INCREASE in Total Filings for the 12-month period ending March 31, 2005 (compared to the identical period in 2004):

District of Virgin Islands 17.5%
Northern District of Iowa: 13.0%
Western District of Pennsylvania: 12.7%
Southern District of Texas: 12.7%
Northern District of West Virginia: 11.0%

Districts with the Highest Percentage DECREASE in Total Filings for the 12-month period ending March 31, 2005 (compared to the identical period in 2004):

District of Nevada 16.3%
District of Puerto Rico 13.6%
Central District of California 11.5%
District of Maryland 10.9%
Southern District of Florida 8.7%

More information will be available at ABI’s Statistics Page.

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 11,000 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 www.abiworld.org. For additional conference information, visit http://www.abiworld.org/conferences.html.

*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.