Total Bankruptcy Filings Increase Nearly 35 Percent Over First Quarter 2008

June 22, 2009

Both consumer and business bankruptcy filings increased dramatically during the first quarter of 2009 over last year.

The total number of U.S. bankruptcies filed during the first three months of 2009 increased 34.5 percent over the same period in 2008, according to data released by the Administrative Office of the U.S. Courts on June 9, 2009. As total filings reached 330,477 for the first quarter, the total surpassed the 245,695 new cases filed over the same period in 2008. The total filings in the 2009 first quarter also represent a 9.7 percent increase from the 301,317 bankruptcies filed during the fourth quarter of 2008.

Business filings for first quarter totaled 14,319, representing a 64.3 percent increase over the first quarter 2008 total of 8,713. The first quarter filings represented an 11 percent increase over the fourth quarter 2008 total of 12,901.

Consumer filings also increased during the first quarter of 2009. The total number of filings increased 33.4 percent to 316,158, from the 2008 first quarter total of 236,982. They also represent a 9.6 percent increase from the fourth quarter of 2008, which recorded a total of 288,416 non-business filings.

The percentage of consumers filing for Chapter 13 protection fell slightly, from 35.6 percent during the first quarter of 2008 to 29.2 percent over the same period in 2009. The number of consumers filing for Chapter 7 protection increased to 70.8 percent during the first three months of 2009, the largest percentage of consumer Chapter 7 filers since the implementation of Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) in 2005.

Tennessee, Nevada and Alabama were the states with the highest per capita filing rate for the 12-month period ending March 31, 2009. Georgia, Indiana, Michigan, Ohio, Kentucky, Arkansas and Illinois round out the top 10.

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. 

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.

For more information, visit the American Bankruptcy Institute's Web site.