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National Bankruptcy Research Center March 2010 Bankruptcy Filings Report


Bankruptcy filings in March 2010 rose to 150,000, up from 113,000 in February. Because March usually has one of the highest filing levels of the year, the significance of the increase is difficult to gauge. Still, it is clear by any measure that there was a substantial upturn in filings. For example, on a seasonally adjusted basis (accounting for the typical variation in filings through the course of the year), filings were up about 5% from February to March. Comparing filings this March to last March shows a 23% increase. For the first quarter of the year, aggregate filings are up 18% from a year ago.

The filings also reflect the continued prevalence of Chapter 7 (liquidation) filings; only 25% of the March filings sought relief under Chapter 13 (rehabilitation). The continuing decline in the share of Chapter 13 filings contrasts with the strong push by Congress in its 2005 bankruptcy legislation to encourage bankrupts to choose Chapter 13 rather than Chapter 7. As is typical, there was a substantial variation among the States in the prevalence of bankrupts seeking Chapter 13 relief. The States with the highest share of Chapter 13 filings remain concentrated in the South. For the first quarter of 2010, Louisiana’s share was 62%, followed by Alabama and Texas (both over 50%), and then by South Carolina, Tennessee, North Carolina, Arkansas, and Georgia. At the other end of the spectrum were States with relatively low Chapter 13 shares; Iowa, New Mexico, and Connecticut all had less than 10% of their filings under Chapter 13.

The filings also reflect the continued prevalence of Chapter 7 (liquidation) filings; only 29% of the filings this year sought relief under Chapter 13 (rehabilitation), down from a 31% share during the same period last year. The continuing decline in the share of Chapter 13 filings contrasts with the strong push by Congress in its 2005 bankruptcy legislation to encourage bankrupts to choose Chapter 13 rather than Chapter 7. As is typical, there was a substantial variation among the States in the prevalence of bankrupts seeking Chapter 13 relief. The States with the highest share of Chapter 13 filings were concentrated in the South. Louisiana’s share was 68%, followed by Alabama, Texas, and South Carolina (all more than 50%). At the other end of the spectrum were States with relatively low Chapter 13 shares; New Mexico and Iowa, for example, had less than 10% of their filings under Chapter 13.

Nationwide, first quarter filings amounted to about 3100 filings per million households – about 1 in every 300 households. As the attached map shows, the high filing rates are concentrated in two clusters: the Southwest and the Southeast. The states with the highest household-adjusted bankruptcy filing rates are Nevada (more than twice the national average), followed by Georgia, Tennessee, California, and Michigan (all about one and a half times the national average). The lowest filing rates, about a third of the national average, were in Alaska, the District of Columbia, and North Dakota. At the county level, the counties with the highest filing rates (adjusting for households located in the county) were concentrated in suburbs of Atlanta, Georgia. Six of the ten counties with the highest filing rates were in Georgia, with the highest rate in the country (almost three and a half times the national average) occurring in Barrow County, Georgia.

The general trends discussed above, however, obscure sharp localized patterns. Although many states continue to see sharply increased filing rates, a few states have already begun to see rates fall. Thus, where filings have risen by 45% in Arizona and California, they have fallen so far this year in Tennessee, South Carolina, and Alabama.

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. March Figure 1 March Figure 2