US bankruptcies in the first quarter were the highest since 2005. You might ask what happened in 2005 to cause a high bankruptcy rate? In that year there were a rush of bankruptcies ahead of a new bankruptcy law that was designed to curb abuses. The law took effect in October 2005.
Now to the present. Let's look at the numbers:
- There were 330,477 filings in the first quarter, up 10% from the previous quarter and up 35% from a year earlier.
- The Administrative Office of the US Courts reported that consumer filings were up 33%, while business filings were up a whopping 64%
- As of March 31st, filings rose 33% to 1,202,503 from a year ago.
- By states, California had the most filings in the quarter with 42,992, Florida had 20,701. Next came Georgia with 18,154 filings.
- Filings are still climbing in this quarter. In April and May there were 250,456 consumer bankruptcies, while commercial filings were up by nearly 50% according to National Bankruptcy Research Center.
- Here is a breakdown by bankruptcy chapters: Chapter 7 filings, often used by consumers rose 47% to 233,260.
- Chapter 13 filings which let people discharge some debts rose 10% to 93,195
- Chapter 11 filings used by businesses surged 83% to 3,679.
- On a per capita basis, Tennessee had the most filings last year with 8.1 per 1,000 population . This was followed by Nevada with 8.07 per 1,000/ Tennessee's was highest because their law permits creditors to attach debtor wages.
So what can we say about all this? Well for one thing, those who say that the housing market is improving are on the wrong side of these numbers. Unlike the unemployment report that came out last Friday showing a slight drop in unemployment claims, home foreclosures are still rising, with business filings taking a sharp jump. We've heard little about the business aspect of the housing bust. Judging from the numbers, this will be the next time bomb waiting to explode.
Do you believe that foreclosures will drop this year?
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Reader Comments (Page 1 of 1)
6-09-2009 @ 10:36PM
David Leibowitz said...
Bankruptcy cases are accelerating. Moreover, they are increasing among those with higher income. In the past month, I have observed more individual and small business chapter 11 cases. And the same is true for foreclosure cases. No longer are foreclosure cases confined to the sub-prime sector. As an actively practicing bankruptcy lawyer in Illinois and Wisconsin, I see the trend of bankruptcy cases increasing for an extended period before it levels off.
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