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Contact: John Hartgen
             (703) 739-0800
            
jhartgen@abiworld.org

BANKRUPTCY FILINGS DURING FIRST THREE QUARTERS OF 2006 DROP OFF NEARLY ONE MILLION FROM PREVIOUS YEAR

December 5, 2006, Alexandria, Va.— The total number of U.S. bankruptcies filed during the first three quarters of 2006 (Jan. 1 – Sept. 30, 2006) fell to 443,750 from 1,410,484 for the same period in 2005, according to data released today by the Administrative Office of the U.S. Courts. The combined total of the first three quarters of 2006 (Jan. 1- Sept. 30) represent the lowest number of calendar filings for the first nine months of a year since the first three quarters of 1987, when bankruptcy filings totaled 432,821 during a similar calendar period. The filings for the first three calendar quarters of 2006 also represent a 68.54 percent drop in filings from the previous year’s three quarter filings (Jan. 1-Sept. 30, 2005), when 1,410,484 bankruptcies were filed.

“On the eve of a Senate oversight hearing on the new bankruptcy law, today’s numbers confirm that we are seeing filing levels not present since the 1980’s,” said Samuel J. Gerdano, ABI Executive Director. “Congress clearly wanted to reduce filings, but only time will tell if the 2006 trend is sustainable,” he concluded.

The 2006 third quarter (July 1-Sept. 30, 2006) filing total of 171,146 also represents a 68.42 percent drop compared with the 542,002 total filings for the same three-month period ending Sept. 30, 2005. The 1,112,542 total filings during the 12-month period ending Sept. 30, 2006, represent the lowest number of filings in a 12-month period since the 12-month period ending Sept. 30, 1996, when there were 1,111,964 filings. Total filings decreased from the 1,782,643 filings reported for the 12-month period ending June 30, 2005.

Total consumer filings for the nine-month period from Jan. 1 – Sept. 30, 2006, were 429,522, representing a 68.97 percent decrease from the same period in 2005, in which consumer filings totaled 1,384,209. The 14,228 business filings from Jan. 1 – Sept. 30, 2006, represented a 45.85 percent decrease from the same period the previous year, in which 26,275 business filings were recorded.

Due in large part to the new requirements of the Bankruptcy Abuse Protection and Consumer Protection Act of 2005 (BAPCPA), the type of consumer bankruptcies filed in the first nine months of 2006 shifted considerably from the first nine months of 2005. Chapter 13 filings represented 41.39 percent of all consumer filings in the nine-month period ending Sept. 30, up from 22.79 percent during the same period of 2005. Conversely, the percentage of consumer chapter 7 filings fell to 58.52 percent of total consumer filings in the nine-month period ending Sept. 30, 2006, from 77.16   percent during the first three calendar quarters of 2005.

Nonbusiness filings for the 12-month period ending Sept. 30, 2006, fell 37.9 percent to 1,085,209 from the 1,748,421 total nonbusiness filings in the 12-month period ending Sept. 30, 2005. The 27,333 total business filings for the 12-month period ending Sept. 30, 2006, represented a 20.13 percent decrease from the 34,222 bankruptcy petitions filed in the 12-month period ending Sept. 30, 2005.

Total chapter 7 filings fell 38.11 percent to 833,147 in the 12-month period ending Sept. 30, 2006, from 1,346,201 in the same period last year. Chapter 13 filings fell 36.43 percent to 272,937 in the 12-month period ending Sept. 30, 2006, from 429,316 in the same period last year. Chapter 11 filings also declined, falling 9.55 percent to 6,003 in the 12-month period ending Sept. 30, 2006, from 6,637 in 2005. Conversely, chapter 12 filings rose slightly from 364 in the 12-month period ending Oct. 31, 2005, to 376 in 2006.

BUSINESS FILINGS for the three-month period ending Sept. 30, 2006, totaled 5,284, down 44.24 percent from the 9,476 bankruptcy business cases filed in the same quarter in 2005. NONBUSINESS FILINGS for the three-month period ending Sept. 30, 2006, decreased 68.85 percent from 532,526 in the same period in 2005 to 165,862.

The chapter* breakdown of BUSINESS filings for the three-month period ending Sept. 30, 2006, is: 3,249 chapter 7s, 1,192 chapter 11s, 97 chapter 12s and 716 chapter 13s.

The chapter breakdown of NONBUSINESS filings for the three-month period ending Sept. 30, 2006, is: 96,442 chapter 7s, 140 chapter 11s and 69,280 chapter 13s.

NOTE: ALL CIRCUIT DISTRICTS EXPERIENCED FILING DECREASES FOR THE 12 MONTH PERIOD ENDING SEPT. 30, 2006 WHEN COMPARED TO THE IDENTICAL PERIOD IN 2005.

Districts with the LOWEST PERCENTAGE DECREASE in Total Filings for the 12-month period ending Sept. 30, 2006 (compared to the identical period in 2005):

  1. District of the Virgin Islands: 8.51%
  2. District of Vermont: 23.10%
  3. Northern District of Indiana: 26.32%   
  4. Eastern District of Michigan: 28.07%
  5. Western District of Pennsylvania: 29.64%

Districts with the HIGHEST PERCENTAGE DECREASE in Total Filings for the 12-month period ending Sept. 30, 2006 (compared to the identical period in 2005):

  1. Eastern District of Louisiana: 51.78%
  2. District of Utah: 51.41%
  3. District of Arizona: 50.92%      
  4. District of New Mexico: 49.10%       
  5. Northern District of West Virginia: 45.76%

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ABI is the largest multi-disciplinary, nonpartisan 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 11,500 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.

 


 

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