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National Bankruptcy Research Center December 2011 Bankruptcy Filings Report

The final results for 2011 are in, and annual filings fell by 12%, from slightly more than 1,500,000 in 2010 to 1,350,000 in 2011. This is the first time year--‐on--‐year filings have fallen since 2006 (the year after bankruptcy legislation sharply reduced filings). On a short---- term basis, however, prospects are not so sanguine. Numerically, bankruptcy filings in December were almost exactly the same as November (101,000), but December filings are typically quite low. So, on a seasonally--‐adjusted basis filings were actually up 7% from November. On the heels of a similar increase in November, there is some reason to think filings in 2012 might start edging up again.

Breaking down those shifts by Chapter helps to show what is happening at this point in the recession – the Chapter 7 (liquidation) filings seem to be receding more rapidly than the Chapter 13 (rehabilitation) filings most commonly associated with homeowners. So, for example, Chapter 7 filings were down 13% in 2011 from 2010, but Chapter 13 filings fell only 7%. Conversely, where the seasonally adjusted data for December suggest an increase from November, the increase is only 5% for Chapter 7 filings but 10% for Chapter 13 filings. However, December appears to have been an unusual month on that point; for the second half of the year, Chapter 7 filings are down 17% from last year, while Chapter 13 filings are down 25% from the same period last year.

Nationwide, 2011 filings amounted to about 5800 filings per million adults, or one in every 175. As always, national disparities show that this really is an average – reflecting starkly higher and lower filing rates across the country. Despite a fall of almost 20% from last year’s filing rate, Nevada still stands alone at the top with almost twice the national average (about 11,400 filings per million adults). After Nevada, the highest rates are in Georgia, Utah, and Tennessee, all with 9500--‐10,000 filings per million adults; California is next in line, with 8300 filings per million adults. At the other end of the spectrum, six (mostly small) jurisdictions this year have filings less than half the national average. In ascending order, they are Washington, D.C., Alaska, South Carolina, Vermont, North Dakota, and Texas. Texas’s place on that list (with 2700 filings/million adults) is noteworthy, since its population far exceeds that of all the other low--‐filing states combined. Also of note among large states is New York’s remarkably low rate (3130/million adults), only slightly more than half the national rate.

Another noteworthy trend is the sharp disparity in changes in filing rates since last year. Filings in 2010 were still rising in the Southeast and the Pacific Southwest, while they were falling in much of the rest of the country. This year, the fall in filings has spread throughout the nation. Thus, the only State with a substantial increase in filing from last year is Delaware (up by 8%).

Filing rates at the county level show even larger disparities. As reflected in Tennessee’s fourth--‐place status in state--‐level filings in 2011, a surge in Memphis filings this fall put Shelby County, Tennessee at the top of the county list, with more than three times the national rate (about 18,750 filings/million adults). At the other end of the spectrum, forty counties finished the year without a single bankruptcy filing this year: all of them small rural counties; the largest by population is Sioux County, North Dakota (with an adult population of less than 3000). Mirroring the state data, the counties with the highest filing rates are concentrated in the Southeast, as they have been throughout the downturn. As the table below shows, all of the top ten counties were in the southeast and seven of the top ten were in Georgia, reflecting the high rate of filings in Georgia overall – second highest in the nation in 2011.

Shelby (Tennessee)18,764 (12,814)
Henry (Georgia)17,752 (2,561)
Newton (Georgia)17,641 (1,254)
Rockdale (Georgia)17,110 (1,066)
Walton (Georgia) 16,819 (1,029)
Douglas (Georgia) 16,602 (1,575)
Petersburg City (Virginia) 15,129 (389)
Clayton (Georgia)14,948 (2,757)
Butler (Alabama)13,970 (222)
Jackson (Georgia) 13,816 (614)
Calculations based on total 2011 filings. National average is 5800 filings per million adult inhabitants.

Except for Shelby County (Memphis, TN), the counties listed above are rural. To get a sense for filing patterns in urban areas, the table below considers only counties with an adult population of 250,000 or more and shows the urban counties with the five highest and five lowest filing rates in 2011. Joining Memphis from the southeast is DeKalb County, Georgia (straddling the eastern edge of Atlanta). The other three counties on the list come from the southwest: Las Vegas in Nevada and Riverside and San Bernardino in California. At the other end of the spectrum, none of the urban areas with the lowest filing rates are in the western half of the country. The top five, all with less than one third the national filing rate, are McAllen, Texas, New York City, the District of Columbia, Charleston, South Carolina, and Austin, Texas, in that order.

Shelby (Memphis, TN)18,764 (12,814)
Riverside (Riverside, CA) 13,159 (20,653)
DeKalb (Decatur/Atlanta, GA) 13,017 (6,857)
Clark (Las Vegas, NV)13,004 (19,020)
San Bernardino (San Bernardino, CA)12,675 (18,260)
Travis (Austin, TX)1,925 (1,500)
Charleston (Charleston, SC)1,913 (531)
District of Columbia1,891 (947)
New York (New York, NY)1,803 (2,437)
Hidalgo (McAllen, TX) 1,750 (886)
Calculations based on total 2011 filings. Table shows total filings in parentheses. Excludes counties with less than 250,000 adult inhabitants.

This analysis was performed on data collected by the National Bankruptcy Research Center (NBKRC) by NBKRC contributor Professor Ronald Mann of the Columbia Law School.