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National Bankruptcy Research Center March 2011 Bankruptcy Filings Report

March Filings Down From 2010: March bankruptcy filings were the highest in eleven months – 145,000 (up from 103,000 in February and only 93,000 in January). But there is no reason to think this presages a return to the high filing rates of 2008 and 2009. March is traditionally the highest filing month of the year (presumably in part because bankrupts use their tax refunds to pay attorney fees and filing costs). That relatively high number takes on a less alarming perspective when we notice that this year’s March filings were down 3% compared to last March. More broadly, filings for the first quarter of 2010 were down 6% from the first quarter of 2010. Looking over an even broader time period: for four years in a row, every month’s filings were higher than the filings for the same month in the previous year, but we have now had three consecutive months in which filings were down from the previous year. The worst is behind us.

Regional Variation Has Filings Highest in Nevada at the State Level, in Georgia at the County Level, and in Memphis and Los Angeles at the City Level: Nationwide, 2010 filings amount to about 1500 filings per million adults, about one in every 700 people. But that figure is quite misleading, because through the course of the last two years the filing rates have become increasingly disparate throughout the country. Generally, the highest filing rates are concentrated in the Southwest and a swathe cutting up from the Southeast. Thus, on a population-adjusted basis, Nevada has almost twice the national filing rate; Georgia, Tennessee, Utah, and California follow (in that order), all with more than one and a half time the national average. At the other end of the spectrum, seven jurisdictions this year have filings less than half the national average. In ascending order, they are Washington, D.C., Alaska, Vermont, South Carolina, North Dakota, South Dakota, and Texas.

The variation at the county level is even greater. At the national level, bankruptcy filings in March were about 622 per million adults. The highest filing county in the country last month (Henry County, Georgia) had a filing rate more than three times the national average. The counties with the highest filing rates remain concentrated in the Southeast. As the table below shows, all of the counties were in the south; the top two and five of the top ten were in Georgia. {The table excludes small counties with less than ten filings.}

Shelby (Memphis, TN)1760 (1179)
Riverside (Riverside, CA)1498 (2261)
San Bernardino (San Bernardino, CA)1382 (1958)
Clark (Las Vegas, NV)1379 (1933)
Adams (Denver, CO)1346 (426)
Travis (Austin, TX)199 (155)
Charleston (Charleston, SC)186 (52)
District of Columbia (Washington, DC)181 (88)
New York (New York, NY) 169 (232)
Hidalgo (McAllen, TX)166 (78)
Calculations based on March 2010 filings. Excludes counties with less than 250,000 adult inhabitants. National average is 622 filings per million adult inhabitants.

Trends – Filings Down in 45 of 50 States, But Still Rising in California: Another noteworthy trend is the sharp disparity in changes in filing rates since last year. Five states still have filings higher this year than last year: Delaware and Utah are up 12%, with California, New Jersey, and Idaho up by smaller amounts. As noted above, California’s continuing increase is bringing it rapidly up the list of states with the highest filing rate; as noted above, it now has the fifth-highest filing rate in the country. At the other end of the distribution, several states have seen filings plummet since last year: filings are down by 20% or more in Vermont, West Virginia, and the District of Columbia.

Perhaps the most interesting way to think about the trends is to focus on the states in which the crisis probably was the worst: California, Florida, Georgia, and Michigan. In three of the four, filings are now on their way down, but in California the filings are still going up. The table below (which includes Texas as an example of the largest state that has suffered relatively little from the crisis) illustrates the point. As the crisis reached its apex in 2009, Georgia’s filing rates were near the highest in the nation, much higher than California’s. Since that time, they have fallen, albeit only slightly, while California’s have increased by about 30%, so that California now has the fifth highest filing rate in the nation. To put that figure in perspective, more than one in six of the nation’s 2011 bankruptcy filings have come in California. The filing rate in Texas (with a roughly similar population) is less than a third the rate in California.

State2009 Filing Rate (Rank)Filings Growth in 2010Filings Growth in 20112011 Filing Rate (Rank)

Henry (Georgia)1919 (260)
Douglas (Georgia)1830 (167)
Petersburg City (Virginia)1761 (44)
Shelby (Tennessee)1760 (1179)
Walton (Georgia)1752 (112)
Rockdale (Georgia)1701 (103)
Newton (Georgia)1655 (117)
Grant (Kentucky)1632 (30)
Hopkins (Kentucky)1605 (57)
Franklin (Mississippi)1595 (10)
Calculations based on March 2010 filings. Excludes counties with less than 10 filings. National average is 622 filings per million adult inhabitants.

Most of the counties with the highest filing rates are rural. But there also is considerable variation in urban areas. The table below considers only counties with an adult population of 100,000 or more and shows the urban counties with the five highest and five lowest filing rates in March. After Memphis atop the list (with almost than three times the national average), the highest filing rates are in the southwest: Riverside and San Bernardino in California, Las Vegas, and Denver. 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 about one third the national average, are McAllen, Texas; New York City; Washington, DC; Charleston, South Carolina, and Austin, Texas.

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.