December 15, 2005,Alexandria,Va.— Quarterly filings for the three-month period from July 1, 2005, to September 30, 2005, set a single-quarter filings record, increasing by 36.7 percent when compared to the same period in 2004, according to data from the Administrative Office of the U.S. Courts. This quarter immediately precedes the new Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), which was enacted on April 20 and took effect on Oct. 17. The record pace continued into October, when more than 600,000 new bankruptcies were filed nationwide, compared to just 130,679 in October 2004.
During the third quarter of 2005, the first full quarter since the passage of the new bankruptcy law, a total of 542,002 bankruptcies were filed. That is an increase of 74,669 cases when compared to second quarter 2005 filings, which totaled 467,333, the previous three-month record.
The overall quarterly increase was primarily fueled by a surge in chapter 7 filings. Total chapter 7 filings rose 18.4 percent from the second quarter, from 362,481 to 429,299; 98.4 percent of those chapter 7 filings were by individuals with household debt. The new law makes it harder to file under chapter 7.
"Consumers with heavy household debts stormed the bankruptcy courts this fall, rushing to beat the deadline of the new law," said Samuel J. Gerdano, Executive Director of the American Bankruptcy Institute.
The number of bankruptcy cases filed in the 12-month period ending September 30, 2005, totaled a record 1,782,643, up 10.1 percent from the 1,618,987 bankruptcy cases filed in the 12-month period ending September 30, 2004. Non-business filings for the period totaled 1,748,421, up 10.4 percent from the 1,584,170 non-business filings during the 12-month period ending September 30, 2004. In the 12-month period ending September 30, 2005, business filings dropped to 34,222, down 1.7 percent from 34,817 filings reported in the previous 12-month period.
Of the total number of bankruptcy filings in the 12-month period ending September 30, 2005, there were 1,346,201 chapter 7 filings, a 16.7 percent increase over the 1,153,865 chapter 7 filings for the same period in 2004. The next largest group of filings was chapter 13 filings at 429,316, a 5.8 percent decrease from the 454,412 filings in the 12-month period ending September 30, 2004. Chapter 12 filings totaled 364, a 52.9 percent increase from the 238 filings in the 12-month period ending September 30, 2004. Reflecting the strong economy and low interest rates, chapter 11 filings fell from 10,368 to 6,637 in the 12-month period ending September 30, 2005, a 56.2 percent decrease.
BUSINESS FILINGS for the 3-month period ending September 30, 2005, totaled 9,476, up 25.1 percent from the 7,574 bankruptcy business cases filed in the same period in 2004. NON-BUSINESS FILINGS for the 3-month period ending September 30, 2005, increased 36.9 percent, from 388,864 in 2004 to 532,526 in 2005.
The chapter* breakdown of BUSINESS filings for the 3-month period ending September 30, 2005, is: 6,832 chapter 7s, 1,310 chapter 11s, 83 chapter 12s and 1,216 chapter 13s.
The chapter breakdown of NON-BUSINESS filings for the 3-month period ending September 30, 2005, is: 422,467 chapter 7s, 225 chapter 11s and 109,833 chapter 13s.
Districts with the Highest Percentage INCREASE in Total Filings for the 12-month period ending September 30, 2005 (compared to the identical period in 2004):
District of Northern Mariana Islands: 88.24%
District of Alaska: 28.41%
Northern District of West Virginia: 27.33%
District of North Dakota: 25.46%
Southern District of West Virginia: 24.80%
Districts with the Highest Percentage DECREASE in Total Filings for the 12-month period ending September 30, 2005 (compared to the identical period in 2004):
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related to insolvency. ABI was founded in 1982 to provide Congress and
the public with unbiased analysis of bankruptcy issues. The ABI
membership includes over 10,300 attorneys, accountants, bankers, judges,
professors, lenders, turnaround specialists and other bankruptcy
professionals providing a forum for the exchange of ideas and
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*Definitions from Bankruptcy
Overview: Issues, Law and Policy, by the American Bankruptcy
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
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.