Still on Target for 1,000,000 Bankruptcy Filings

While I was busy with last week's Debtor World conference, the April 2008 bankruptcy filing figures became available from AACER. If I wanted to be sensational, I could compare the latest figures to the 2007 figures and tout how filings are up over 37% from the previous year. Or, I could compare the April 2008 total of 93,096 to the March figure and note filings climbed 3% in one month. Although both of those calculations are technically correct, they also are misleading.

On a daily basis, filings were 4,232 for each business day in April as compared to 4,301 for each business day in March. That is a slight decrease (a 1.6% decrease to be exact). Does this mean that filings are easing off? Not really. In recent years, April filings per day have been roughly the same as March. In fact,  if the past patterns hold, daily filings will hold steady until October or November when they again will climb. The calculations still suggest we'll see over 1,000,000 bankruptcy filings for all of 2008.

To be precise, the numbers through April suggest that the 2008 calendar year will see:

• 1,034,000 filings if filings continue through the rest of 2008 at the same daily rate they have averaged for the first three months of 2008
• 1,044,000 filings if filings continue through the rest of 2008 at the same daily rate they averaged in March 2008
• 1,081,000 filings if filings after March 2008 represent the same proportion of filings (about 77.3%) as the filings after March 2007 represented of the total 2007 figures

Those numbers are just extrapolations. A more sophisticated forecasting technique that takes into account past patterns predicts 1,018,000 filings for 2008 with a 95% confidence interval that has a lower bound of 860,000 and an upper bound of 1,175,000. Although the convergence does not necessarily make the prediction any more accurate, it is telling that all of these techniques come up with a number that is slightly more than 1,000,000. Even after the 2005 changes to the bankruptcy law, it looks like the United States will again see more than 1,000,000 bankruptcy cases in a year.