Ramsey County

Making $ense of Dollars and Cents

February 2, 2009

Bankruptcy Rate Climbs

          Each and every quarter, the administrative office of the U.S. Courts compiles statistics on bankruptcy filings.  The statistics they compile are never good news for those involved with a bankruptcy – what is making the news lately is how many more people are involved.  

          What U.S. Courts statistics showed is that personal bankruptcies grew to more than 1 million filings in the United States in 2008 – that is the most since a rewrite of bankruptcy laws went into effect in 2005.  By comparison, in 2007, there were 819,115 such filings in the 50 states and Washington, D.C.

          Filings of both Chapter 7 and Chapter 13 bankruptcies rose 33% in 2008.  Chapter 13 bankruptcy allows people to pay off debts under a three- to five-year plan; Chapter 7 bankruptcy allows for a discharge of all debts.

          2005 holds the record with 2.1 million filings, when consumers rushed to file before a new federal bankruptcy reform law went into effect and made filings more difficult and expensive.

                The greatest increases in per capita bankruptcy filings were found in Nevada (7.15 filings per 1,000 residents), Delaware (4.02), California (3.57), Florida (3.63) and Rhode Island (3.99).  North Dakota rated happily near the bottom with 1,341 bankruptcy filings which affected 0.5% of the households in the state.

          For the second straight year, Tennessee had the overall highest per capita rate of filings, with 7.65 filings per 1,000 residents. Alaska retained its title as the land of the fewest personal bankruptcies with only 877 bankruptcies filed all year which is a rate of 1.28 per 1,000.

          Chapter 11 bankruptcies, under which businesses file for court-supervised reorganization or liquidation, also grew.  A total of 10,084 companies filed under Chapter 11 in 2008 which represented an increase of 62% and was more than double the number of such filings in 2006.

          Online you can find the statistics at: http://www.uscourts.gov/bnkrpctystats/bankruptcystats.htm

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