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How Many Bankruptcy Filings Were There in September?

posted by Bob Lawless

In a post yesterday, I used bankruptcy filing figures from Automated Access to Court Electronic Records (AACER) that showed just over 125,500 total filings in the month of September. A large number of news stories reported there were 124,790 consumer filings in September (e.g., here, here, and here). In turn, these stories were sourced to the American Bankruptcy Institute (ABI), which in turn attributed its data to the National Bankruptcy Research Center. This is too small a difference (about 0.5%) to be explained by a discrepancy between consumer versus total filings.

Both of these figures cannot be right. I have posted about how I have beaten on the AACER data and found them accurate. Also, I wrote to AACER, and they verified their September 2009 number. For these reasons, I believe the AACER report on September bankruptcy filings is accurate. I wonder whether the ABI release did not confuse total filings and consumer filings. It's not that I feel the need to call out a mistake by the media or the ABI on the September figures. Goodness knows that I make a lot of mistakes, and I may be mistaken here. Rather, my attempt to reconcile the two figures reminded me again that the line between consumer and business cases is so thin that it often is not profitable to make the distinction.

First, why do I think the ABI figure might have been for total filings and not consumer filings in September 2009? The ABI press release also reports there were 88,663 consumer filings one year before, in September 2008. The historical AACER data reports 96,138 total filings for the same month. That difference, about 8.4%, is about the right amount to represent the difference between counting consumer filings and business filings, with business filings defined to include individual business owners filing because of a failed business. And, each month the ABI data for consumer filings usually shows a similar difference as compared to AACER's data for total filings. Most importantly, the ABI figures compute out to a year-over-year increase of 41% for September 2008 where AACER's data show a year-over-year increase of only 31%. If I "gross up" AACER's September 2009 filing figures by 8.4%, then I match the ABI's year-over-year increase of 41%.

All I have is supposition, and main point anyway is the distinction between "business" and "consumer." This whole exercise would be helpful if we understood what the ABI counts as a "consumer" bankruptcy. If it is the U.S. courts' definition, then it is an overcount because it is sweeping up business owners who are filing for bankruptcy. Broader definitions, such as AACER's count of commercial bankruptcies using employer identification numbers and "d/b/a" designations, are better but have their own drawbacks. If what we are most interested in knowing are long-term trends, we can avoid these complications by focusing on the total bankruptcy filing figure.


Speaking of mistakes -

What are "Filigns" in the title? :-)

Oops . . . Thanks.

As long as we are focusing on filing numbers, and dating back to one of my points to the NBRC in 1997 numbers today as well as in prior years include "refile" or "conversion to another chapter" in the totals. In other words, a consumer who filed a chapter 13 say in August where the case was dismissed in September and refiles another 13 counts as two consumer filngs. Since no tracking that I know about captures refiles or conversions and what influence in numbers it has today, I thought we may as well add each to consider.

Business and Consumer BKs have a very blurry line. ie. Debtors may be incorporated and say the Corporation does a 7, most of the time the debtors personally guaranteed the loans so they have to do a personal "Consumer" Bk. Is it Business debt...Yes. Is it always a "Business" Bankruptcy.. No. The numbers have to make a distinction as to the % of debt that's truly non-consumer and I don't know how they could. Maybe by distinguishing whether or not they filed a "Certificate of Bankruptcy Counseling" or not..??? Even so we see a substantial portion of business debt in Consumer Bks.

September was pretty brisk for us. We definitely beat August numbers with 3-4 Oct. filings that could have been September but for scheduling. 18(13s), 4(7s) and 1 (conversion). We keep track of refillings also and a quick glance @ this year saw 1-2 every other month or so. One thing I have noticed are the increasing numbers of our debtors surrendering their homes (even post-confirmation, JOBSSSSS). Mortgage mods are a tiny trickle. "Maybe" 1 a quarter. On the up side we have seen an increase in Stay Violations...woohoo (more work for me :O)

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