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National Bankruptcy Research Center February 2012 Bankruptcy Filings Report

Bankruptcy filings in February were up by 20% from January (98,000 as compared to 81,000). But this is not nearly so ominous as it seems, because January is traditionally the lowest filing month of the year, and February filings typically rise steeply from January levels. Thus, the month-on-month increase was only 7% on a seasonally adjusted basis. To put the figures in broader perspective, the February filings were down 5% from February of last year and filings for the year so far are down 8% from the same time in 2011. Breaking the filings down by type, the data continue to reflect a shift toward Chapter 13 filings: Chapter 7 filings are down 9% from last year while Chapter 13 filings have fallen only by 6%.

Nationwide, January filings amounted to about 750 filings per million adults, or one in every 1300. As always, national disparities show that this really is an average – reflecting starkly higher and lower filing rates across the country. With the shift toward Chapter 13 filings (more commonly associated with mortgage distress), the States in the Southeast are the worst hit. Thus, so far this year, the highest rates are in Tennessee and Georgia, both with about 1400 filings/million adults (just under twice the national average). Similarly at the county level, all of the fifteen highest-filing counties in the nation are in Georgia, Tennessee, or Alabama. To date this year, the highest filing rate is in Shelby County, Tennessee (Memphis), with a filing rate of 2,920/million adults, almost four times the national average.

The top-heavy nature of the filing patterns (with high filings concentrated in a relatively small group of relatively large-population states) is underscored by the large group of States with relatively low filings rates. Ten states have rates less than half the national average, and Alaska, Washington, D.C., and North Dakota are all at about one-third of the national average.

One of the most interesting features of the filing patterns is the starkly differing results coming out of the Nation’s largest states. California has suffered badly from the crisis, but finally seems to be recovering: January filings are down 15% from last year (falling quite a bit more than the national average), but still are at 1100/million, about 50% above the national average. New York, however closely associated with the financial crisis, has been largely immune from the increases in bankruptcy filings, and its filings are only 400/million, a bit more than half the national average, but they have climbed in recent months, and are up slightly from last year.

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.