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Bankruptcy Rate Rises in December . . . A Blip and Not a Blip

posted by Bob Lawless

2016 Month Over Month TrendsSomething happened in the U.S. bankruptcy courts that had not happened since October 2010. The daily filing rate increased on a year-over-year basis. There were 56,394 filings in December 2016 as compared to 53,844 in the previous December. Also, because the 2016 filings were spread over one less business day than in 2015, the rise represented a 9.7% increase in the daily filing rate. The lighter-red line in the graph to right the shows just how dramatic the spike was.

Besides the obvious caveat that one month's filings do not a trend make, there are even more reasons to think the December 2016 filings are an anomalous blip. There was a spike in filings last November, apparently to beat the new bankruptcy forms took effect in December 2015. Again, the graph shows it. November 2016 was down 18.1% as compared to the prior year. If we lump November and December together, then the daily filing rate for those two months declined 5.4% in 2016 as compared to the same two months in 2015. A 5.4% decline is about what we saw for all of 2016.

Still, the December figures are keeping with the general trend. The dark red trend line shows that the rate of decrease is slowing and coming back to zero. The trend line in the graph begins in September 2011, when we saw the greatest year-over-year decline of 17.6%.

I am working on my forecast for bankruptcy filings for 2017. More on that tomorrow (hopefully). Preliminary analysis suggests they will essentially remain flat for the coming year. We may have hit "bottom" -- or "top" depending on your perspective -- for the bankruptcy filing rate.

Comments

Thanks for your work, Bob ! It keeps those of us on the "front lines" in the know !

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  • As a public service, the University of Illinois College of Law operates Bankr-L, an e-mail list on which bankruptcy professionals can exchange information. Bankr-L is administered by one of the Credit Slips bloggers, Professor Robert M. Lawless of the University of Illinois. Although Bankr-L is a free service, membership is limited only to persons with a professional connection to the bankruptcy field (e.g., lawyer, accountant, academic, judge). To request a subscription on Bankr-L, click here to visit the page for the list and then click on the link for "Subscribe." After completing the information there, please also send an e-mail to Professor Lawless (rlawless@illinois.edu) with a short description of your professional connection to bankruptcy. A link to a URL with a professional bio or other identifying information would be great.

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