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November Bankruptcy Filings Decline, Following Seasonal Pattern

posted by Bob Lawless

Year End Drops in Bankruptcy Filing Rate According to data from Automated Access to Court Electronic Records ("AACER"), there were about 115,500 total bankruptcy filings in November 2009. This is a drop from October but, contrary to a few reports, not a big drop in filings from October. The raw numbers declined quite a bit--133,300 to 115,500--but November had nineteen business days as compared to twenty-one business days in October. On a daily basis, the November filing rate was 6,079, which is a 4.3% drop from October. The Calculated Risk blog did it exactly right by putting a disclaimer right at the top of its post reporting the raw numbers from a different data source: "The monthly data is noisy and is not adjusted for days in the month."

Moreover, the November drop is keeping with seasonal patterns as shown by the graphs in one of my previous blog posts. The end of the year typically sees a decline in bankruptcy filings. This year's November drop of 4.3% is higher than previous years. Indeed, in 2007 and 2008, November was not a month that saw any drop. The November filing rate has to be coupled with December. To see where bankruptcy filing rates might be headed in the long-term, December 2009 will be an important indicator as well as January - March of 2010, months that normally see big increases.

On a year-over-year basis, November 2009 had a 19.7% increase in the daily filing rate, and I saw some headlines using this datum to report a big rise in bankruptcies. To be honest, I'm really getting tired of that trick. The bankruptcy filing rate has been steadily increasing since the trough right after the 2005 changes to the law. These sorts of headlines are deliberately and misleadingly done to obscure the truth and make things sound scary just to attract attention. In fact, November's 19.7% year-over-year increase is the lowest year-over-year increase using filing rates that all occurred after the 2005 law went into effect. There are indications that the bankruptcy filing rate may even be leveling off. If the December daily filing rate drops by 9.8%--which is not out of the realm of possibility given the ranges of past monthly changes--then the fourth quarter of 2009 will actually have seen a lower daily filing rate than the third quarter. I'm not ready, however, to declare that we have reached a plateau in the filing rate until we see the January and February numbers.

2009 Projected Filings Thru November  
Bankruptcy filings for the 2009 calendar still look like they will be right around 1.45 million. For the record and for the last time in 2009, total bankruptcy filings will be:

  • 1,458,000 filings if bankruptcy filings continue for the rest of the year at the same daily rate (5,808 per day) as they have averaged for the first eleven months of 2009
  • 1,464,000 filings if bankruptcy filings continue at the same daily rate (6,079 per day) as they averaged for November
  • 1,458,000 filings if bankruptcy filings for the remaining month of 2009 constitute the same proportion of total filings as the last month of 2008 constituted for total filings that year (about 8.7%)

Unless there is a break with historical trends, the December 2009 rate is almost certain to show a decline, meaning the first two estimates are probably a little on the high side. The last month of 2007 had 5.4% of the total bankruptcy filings for that month, meaning the last estimate also may be a little on the high side. A figure of 1,450,000 or just a little bit under looks like it will be just about spot on for total 2009 filings.

In the next few days, I'll post my projection for 2010 filings, and stay tuned in January for the final report on the 2009 filing rate.


November and December have been about 20-30% slower than previous months but it is seasonal. For sure. Interviews have remained constant but the filings did drop a bit.

It is a bit different now for this year and hope it go better.

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