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

BANKRUPTCY FILINGS INCREASE 66 PERCENT OVER FIRST QUARTER 2006

June 27, 2007, Alexandria, Va. The total number of U.S. bankruptcies filed during the first three months of 2007 increased 65.83 percent over the same period in 2006 in all bankruptcy court districts, according to data released today by the Administrative Office of the U.S. Courts. As total filings reached 193,641 during the first calendar year quarter of 2007 (January 1-March 31), the total surpassed the 116,771 new cases that were filed over the same period in 2006. They also represent a 9.03 percent increase from the 177,599 bankruptcies filed during the fourth quarter of 2006 (Oct. 1 – Dec. 31, 2006).

"Though bankruptcy filings are still low from a historical outlook, new cases are being filed at much higher rates than a year ago, as more households feel the stress of high debt burdens, a trend that is likely to continue," said ABI Executive Director Samuel J. Gerdano.

Consumer filings increased 66.27 percent to 187,361 for the three-month period ending March 31, 2007 from the 2006 first quarter total of 112,685. They also represent an 8.92 percent increase from the fourth quarter of 2006, which recorded a total of 172,013 nonbusiness filings. The percentage of consumers filing for chapter 13 protection fell slightly from 43.76 percent during the first quarter of 2006 (January 1-March 31) to 39.27 percent over the same period in 2007. The first quarter 2007 percentage of chapter 13 consumer filers is also down from the 42.47 percent recorded in the fourth quarter of 2006.

Business filings for the three-month period ending March 31, 2007 totaled 6,280, representing a 53.7 percent increase over the first quarter 2006 total of 4,086. The first quarter 2007 business filing total also represented a 12.42 percent increase over the fourth quarter 2006 total of 5,586.

While representing an increase over the first quarter 2006 totals, the 2007 first quarter filings are still below the 341,662 first quarter filing average recorded since 1997. This filing shortfall reflects the changes brought about by the implementation of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). The new law, implemented on Oct. 17, 2005, requires that consumers first go through credit counseling before being eligible for bankruptcy. The new law also reduces the scope of bankruptcy relief.

The 695,575 total filings for the 12-month period ending March 31 were down 61.24 percent from the same period in 2006, which totaled 1,794,795 filings. Nonbusiness filings for the 12-month period ending March 31, 2007, totaled 673,615, down 61.72 percent from the 1,759,503 total nonbusiness filings in the 12-month period ending March 31, 2006. Business filings for the 12-month period ending March 31, 2007, totaled 21,960, down 37.78 percent from the 35,292 bankruptcy petitions filed in the 12-month period ending March 31, 2006.

The 413,294 total chapter 7 filings for the 12-month period ending March 31, 2007, represent a 71.14 percent decrease from the 1,432,074 filings from the same period in 2006. Chapter 13 filings fell 22.24 percent to 276,649 in the 12-month period ending March 31, 2007 from 355,756 in the same period last year. Chapter 11 filings also declined, falling 19.98 percent to 5,199 in 2007 from 6,497 in 2006. Chapter 12 filings rose 1.64 percent from 366 in 2006 to 372 in 2007.

BUSINESS FILINGS for the 3-month period ending March 31, 2007, totaled 6,280, up 53.7 percent from the 4,086 bankruptcy business cases filed in the same period in 2006. NON-BUSINESS FILINGS for the 3-month period ending March 31, 2007, increased 66.27 percent from 112,685 in 2006 to 187,361 in 2007.

The chapter* breakdown of BUSINESS filings for the 3-month period ending March 31, 2007, is: 4,071 chapter 7s, 1,283 chapter 11s, 104 chapter 12s and 817 chapter 13s.

The chapter breakdown of NON-BUSINESS filings for the 3-month period ending March 31, 2007, is: 113,659 chapter 7s, 123 chapter 11s and 73,579 chapter 13s.

Districts with the LOWEST PERCENTAGE DECREASE in Total Filings for the 12-month period ending March 31, 2007 (compared to the identical period in 2006):

  1. District of the Northern Mariana Islands: 27.59%
  2. Western District of Tennessee: 33.93%
  3. Southern District of Georgia: 35.65%   
  4. Northern District of Georgia: 38.28%
  5. Middle District of Tennessee: 38.49%

Districts with the HIGHEST PERCENTAGE DECREASE in Total Filings for the 12-month period ending March 31, 2007 (compared to the identical period in 2006):

  1. Eastern District of Louisiana: 78.87% 
         
  2. Eastern District of Oklahoma: 77.90%
  3. Southern District of West Virginia: 77.24%      
  4. Western District of Oklahoma: 77.18%
  5. District of Arizona: 75.24%

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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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