U.S. Bankruptcy Filings Rose 25% To a Record for a Single Quarter

Dow Jones Newswires 27aug01

mindfully.org note: On a yearly basis that would be a 100% increase

ALEXANDRIA, Va. -- The number of new bankruptcies filed during the second quarter rose 25% from a year earlier, to 400,394 -- the most ever for a three-month period, according to data released by the Administrative Office of the U.S. Courts.

"While we expected the second quarter to be high, given historic patterns, breaking the 400,000 mark sets a pace for a new bankruptcy record this year, shattering the 1998 record of 1.4 million total cases," said Samuel J. Gerdano, executive director of the American Bankruptcy Institute.

For the first six months, the number of new bankruptcy cases filed increased 21%, to 767,235 from 634,064. In the record-setting year of 1998, 727,578 cases were filed during the first half.

"The figures for the first half of this year are alarming, if not shocking," Mr. Gerdano said.

For the 12 months ended June 30, bankruptcy filings rose 8.6% to 1.39 million. During that period, personal bankruptcies jumped 8.8% to 1.35 million, while business filings increased 0.6% to 37,135.

Since June 1997, total bankruptcy filings have increased 5.3% due to personal filings, which rose 6.8% during that period. However, in that same time, business bankruptcies fell more than 31%.

California was the state with the most bankruptcy filings. The Golden State reported 147,920 filings in the 12 months ended June 30, or nearly 11% of the 1.39 million total.

In the latest 12 months, Chapter 7 filings rose 9.8% to 972,659 and Chapter 11 filings increased 3.3% to 10,272. In the second quarter, Chapter 7 filings increased by 30.3% and Chapter 11 filings rose 4.5%.

The purpose of Chapter 7 is to achieve a fair distribution to creditors of the debtor's available nonexempt property. Chapter 11's purpose is to rehabilitate a business as a going concern or reorganize an individual's finances through a court-approved reorganization plan.