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Bankruptcy Filings Jump in July, Highest Since 2005 Law

posted by Bob Lawless

2008_filings_per_day_thru_july Bankruptcy filings jumped in July to their highest level since the 2005 changes to the U.S. bankruptcy law. According to the latest figures from Automated Access to Court Electronic Records (AACER), there were 96,355 filings in July 2008 for a daily filing rate, spread over 22 business days, of 4,380. That is a 2.4% jump from the previous month and a 33.2% increase from the same time period one year ago.

Headline mongers can make the monthly jump look even bigger. In terms of raw numbers, July bankruptcies were up 7.3% from the previous month. That calculation, however, ignores the fact that July had one more business day, and when comparing monthly filing numbers, they are very sensitive to the number of business days in a given month. Careful reporting will focus on the daily filing rate rather than the total number of filings for the month of July.

Although I think it is wiser to look at long-term trends rather than monthly changes in the U.S. bankruptcy filing rate, the July figures surprised me. Since the 2005 bankruptcy law had gone into effect and even before that, the summer months had seen a relative plateau for bankruptcy filings with few monthly increases. The July figures buck that trend and are a rare summer increase in the U.S. bankruptcy filing rate. I'll be watching the August figures with great interest. Another increase there will be cause for significant concern and will be yet another sign of increasing economic pressures on American households.

In terms of filings for the 2008 calendar year, the July figures are starting to move the prediction toward the 1.1 million mark. It's looking more and more certain that there will be more than 1,000,000 bankruptcy filings. Specifically we will have

  • 1,037,000 filings if bankruptcy filings continue for the rest of the year at the same daily rate (4,116 per day) as they have averaged for the first seven months of 2008
  • 1,064,000 filings if bankruptcy filings continue for the same daily rate (4,380 per day) as they have averaged for July 2008
  • 1,092,000 filings if bankruptcy filings for the remaining five months of 2008 constitute the same proportion of total filings as the last five months of 2007 constituted for total filings that year (about 44.2%)

Stay tuned.


The economic stimulus payments may have distorted filing patterns this year. In my practice I had to hold up many filings until after my clients had received and spent their payment as they were subject to seizure as non-exempt assets.

Your talking about 7s right? You can't use wild card exemptions for some of that?

We don't have a wild card exemption available here in Colorado.

July was a little slow down here, we filed more at the end of July. 1st week in August was up and the schedule looks full for the rest of the month. I am seeing quite a few Sep. 2 foreclosures coming in to talk, so I guess the last week in August will be “one after another”. One yesterday was horrible! Rather the “situation” was horrible. This single woman of 4 was approved for a $145,000 mortgage making $10-$12 an hour! She had $1k per month coming in as child support but Geeeessss! What was different about this one was that she was initially “owner financed” but 3 months after closing they found someone to buy the paper. It’s like these builders (not always the example you want to look to for honesty) got together and built this new subdivision and offered these “buy here pay here” type of deals. She relayed her excitement to me of when they first approved her for that 145k. She could not believe it. She had never owned a home before and coming from the projects, she had her boys pick out the layout, flooring, etc… Let’s just say she used every bit of that 145k. She was just eeking by, and then the child support stop coming for about 4 months. It was downhill after that.

Why someone would give her that loan, I have no idea and can only speculate. My “speculation” is “doctored docs” plus she but down some money. Someone walked away with a ton of cash after that paper changed hands. If they saw what I saw (and they probably did), there would be no way. This was just last year so maybe..??? We can’t even save that home in a 13. She has income but not even enough. Not even close. No way to extract her equity (none) even though she put money down. Homes are taking longer to sell…. etc… uuuhhhggg! (just needed to “vent” a bit and I don’t mean by drinking beer). I wish!

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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.