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May 2008 Bankruptcy Filings Continue to Show Increase

posted by Bob Lawless

2008_filings_per_day_thru_may_3 The latest bankruptcy filing data have just become available from Automated Access to Court Electronic Records ("AACER"). Where we were just treated to a round of headlines about the government's data that went through March, the AACER data bring us current with May data.

According to AACER, there were 89,560 total bankruptcy filings (of all types) in the month of May. With 21 business days in May, that is a daily rate of 4,266. That figure represents an increase of 34% from the daily rate in May 2007. This is no one-month blip in the data. The daily bankruptcy filing rate for the first five months of 2008 (4,026 per day) is 30% higher for the first five months of 2007 (3,093 per day). So far, there have been almost 423,000 bankruptcies filed in 2008.

On a month-to-month basis, the May figure represents less than 1% increase over the daily filing rate in April. We again seem to be seeing a repeat of the monthly trend that is developing (as monthly filing figures have become available). For the past several years, the bankruptcy filing rate has stayed relatively flat during the late spring and summer months. Increases have come at the beginning and end of the year.

We are still on pace for 1,000,000 bankruptcy filings in 2008. I was surprised by how much the different predictions converge. According to the bankruptcy filing data through May, we will see

  • 1,040,000 filings if bankruptcy filings continue for the rest of the year at the same daily rate (4,026 per day) as they have averaged for the first five months of 2008
  • 1,050,000 filings if bankruptcy filings continue for the same daily rate (4,266 per day) as they have averaged for May 2008
  • 1,077,000 filings if bankruptcy filings for the remaining seven months of 2008 constitute the same proportion of total filings as the last seven months of 2007 constituted for total filings that year (about 61%)

Also, a regression analysis on the trend for bankruptcy filings predicts total bankruptcy filings of 1,043,000 with a 95% confidence interval of 905,000 to 1,181,000 total filings.

Comments

The numbers are still much lower than in 2001, when the Nasdaq "tech wreck" wiped out many people's investments. Obviously, the rise isn't good, but it will probably take a few more years to develop a good baseline under the new (post-2005) laws to know how serious these numbers are.

The steady increase is really no surprise. After October, 2007 there was very little "inventory" of consumers ready to file for bankruptcy relief. The Code changed, but the economic factors leading to bankruptcy have not; if anything, they're getting worse. I think that within the next couple of years we'll be back at the same filing levels we had in 2003 and 2004.

I agree, we already starting to see it here in STX. In 01-04 we saw an increase in "truckers" filing for Chapter 13 bankruptcy. We are again seeing that trend here. We are seeing both the individuals and companies come thru our doors seeking help. This is despite the fact that fuel prices down here in the "STX" or (South Texas) are relatively low. Individuals are being ping-ponged between "hot shot” companies and the like. We are seeing some "oil filed workers" but not as many in the past. I had gleaned some interesting info from an individual who has close ties to the drilling industry. She stated that most if not all of the “new wells” being drilled are being “capped”. I told her that it did not make much sense to drill the hole to just have it capped afterwards. She then imparted her opinion that “they” did not want that extra oil on the market…… yet. So as for our oil filed workers, they seem to have a steady flow of work.

Anyway as for filings here in STX although not as high as some other states and regions, we are nevertheless seeing a steady flow of both 7 and 13s. This month, if pace keeps up, will be higher than even the spring or (post-Christmas) filing season. Summer, oddly enough is shaping up to be one of our busiest ever. No two week vacation for me this summer.

Side note: Thanks Bob for posting these stats. I may not comment enough on them but I use the stats almost daily when talking with attorneys, trustees and their staff. It makes me sound smarter than I really am. I am though always plugging the source of the info and encouraging them to read the blog. I like to give you (Bob) a regional assessment hoping you can somehow put them into some sort of context. Sometimes from this end anyway, I am just looking at the “Trees” and not the “Forest”. Your stats help me look at both.

Thank you.

We have also noticed a fairly large increase in pro-se bankruptcy software sales even exceeding the pre 2005 bankruptcy act. I have to assume this is directly related to the increased fees many attorneys are now having to charge. With fuel costs nearing $5.00 a gallon and an impending recession, filings may reach pre BAPCPA numbers by this time next year.

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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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