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National Bankruptcy Research Center January 2013 Bankruptcy Filings Report

Coming on the heels of news of an economic contraction in the last quarter of 2012, bankruptcy filings in January were surprisingly high. Although January filings traditionally come at by far the lowest rate of the year, this year’s January filings were down only slightly from December (to 76,000 in January from 77,000 in December). Taking account of the typical monthly variation in filings over the end of the year, filings in January were actually up 16% from December. The increase was even larger (an adjusted upturn of 20% from December) in Chapter 7 filings – the liquidation cases that typically involve the most serious financial distress. Cutting back on the steady decline through the fall, a consistent dropoff of 12-15% from filing rates a year earlier, the January filings raise a likelihood of worsening filings to come in 2013. Because March typically brings the highest filing rate of the year (almost a time and a half filings in January), the upsurge could be upon us in just the next few weeks.

Nationwide, filings in January were down only 7% from last year (as compared to a 14% drop between the annual rates for 2012 and 2011). This amounts to 322 filings per million adults, about one for every 3100. The highest rates of filing appeared in Tennessee (about 630 filings per million adults, almost twice the national average), followed by Georgia, Alabama, and Illinois (with 590, 530, and 510 filings per million adults, respectively).

One interesting way to consider the severity of geographic variation is to examine the filing rates in the largest urban centers. The table below displays the filing rates (per million adults) in January 2013 for the Nation’s twelve largest counties – those with more than 1.5 million adults. Within that group, Chicago stands out with by far the highest filing rate, substantially more than twice the national average. After Miami, at almost twice the national average come the large California counties, led by Riverside County (on the east side of Los Angeles) but all substantially above than the national average. At the bottom of the table, by contrast, are the two largest counties in New York City and in Texas. Brooklyn has the lowest rate of all (only 119 filings per million adults last month), but all four are markedly below the national average. Phoenix and Seattle fall in the middle of the table, with filings at about the national norm.

COUNTYJanuary 2013 Filings (Per Million Adults)
Cook (Chicago, Illinois)691
Miami-Dade (Florida)626
Riverside (L.A., California)617
Los Angeles (California)441
San Diego (California)425
Orange (L.A., California) 422
Maricopa (Phoenix, Arizona)340
King (Seattle, Washington)316
Dallas (Texas)253
Harris (Houston, Texas)144
Queens (New York)143
Kings (Brooklyn, New York)119

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.