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Update on the 2007 Filings Watch

posted by Bob Lawless

Annual9807 The folks at Automated Access to Court Electronic Records or AACER provided Credit Slips with statistics on U.S. bankruptcy filings through July 21, 2007. Experts are watching these data because we want to know whether the steady rise in bankruptcy filings since enactment of the 2005 bankruptcy law will continue. Still, we have to be careful not to overinterpret these data. Month-to-month fluctuations are more likely the result of noise than represent a trend. Rather, we should concern ourselves with long-run trends, but we all knowing the saying about what happens in the long run. We need also to pay attention to the short-term but not get carried away.

With those cautionary notes, AACER's data show that there were 434,644 total U.S. bankruptcy filings from January 1 - July 21, 2007. Again, that is a total and hence includes both business and consumer filings. At the same point in 2006, there were only 288,839 total bankruptcy filings, meaning there has been a 50.5% increase over the same time last year. Mike Bickford, the chief manager of Jupiter eSources LLC which runs AACER, has helped me by thinking about these numbers in terms of "filing days."

In other words, how many filings per each day that the courthouse was open. As it turns out, there were 140 filing days from January 1 to July 21 in 2006 and 2007. A simple calculation tells us that there 3,105 filings per filing day so far in 2007 and 2,063 filings per filing day in 2006. So where are 2007 filings headed?

One estimate would be to start with the 434,644 filings so far in 2007 and then consider there are 112 filing days left in 2007 (from July 21). At a rate of 3,105 filings per filing day, we could expect 782,404 filings by the end of the year. Another estimate would be to consider Ronald Mann's point that bankruptcy filings typically plateau in the summer months and then increase later in the year, but what growth rate could we expect for the rest of 2007? Another estimate would be to consider that, according to AACER's count, of the total number of bankruptcy filings in 2006, 50.6% occurred after July 21. Using that as an estimate, we would have 858,858 filings in 2007. Of course, if the filing rate grows faster at the end of 2007 than it did at the end of 2006, we will exceed 858,000 filings. But, we can use those estimates as boundaries, making 782,000 to 858,000 bankruptcy filings a reasonable estimate for the 2007 calendar year.

I've got to turn to some other things. I'll leave to others in the comments to figure out what this all means.

Comments

One would predict a lag effect with foreclosures -- as long as foreclosures are going up, the growth rate in bankruptcies is likely to pick up too, no?

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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 ([email protected]) 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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