Bankruptcy Filings Down 11.7% in 2011

The year-end bankruptcy statistics from Epiq Systems have arrived. There were just over 1,379,000 U.S. bankruptcy filings in 2011, a decline of 11.7% from the previous year.

On a monthly basis, December kept with the theme of the past year. The daily bankruptcy filing rate in December 2011 was 4,584, a decline of 12.1% on a year-over-year basis. The past seven months have seen year-over-year declines in the 10-15% rate range. What makes December 2011 different is that December 2010 itself had a year-over-year decline. In words, the declines are building on previous declines.

The question for the moment is whether bankruptcy filings will level off at around their current level or continue to decline. I'm inclined to think we'll see a further decline in 2012, although that assessment is more instinct than analysis. I'll try to post a more formal analysis about projected bankruptcy filings for 2012. Bankruptcy filings may not be a great economic indicator, but their levels are important for the bankruptcy system.

Comments

[Steve Rhode]

I would expect to see a recurrence of the beginning of year bump we've prevalently seen the past two years.

It's interesting to note that volumes of consumers seeking help from debt relief groups outside of bankruptcy is dropping at much faster rates.

I've been forecasting a continued decline in overall debt relief demand until the credit pipeline begins to be filled again. I don't see that happening in the next 12-24 months.

I don't think the declines are an aversion to intervention or that people are doing better. Without refilling the credit pipeline, the more time that passes simply leaves a shrinking population with lingering unmanageable debt.

[serfin ceorl]

Most debtors deafault before filing bk. Many of them have already filed or are waiting or the oct 2013 date to refile. What I'm seeing these days are debtors who are debt zombies, and are just sick of the monthly payments, so they file bk to make the nightmare go away. The bankks don't have that figured into their algorhythm.

[Knute Rife]

If the bank isn't foreclosing, and they don't have a paycheck to garnish, why file?

[Kent Winward]

Having been filing bankruptcy cases for over 20 years, I've been searching for information (and not finding it) on re-filing statistics.

I'd gather a statistically significant portion of my practice has filed more than once. It has always struck me that analyzing re-filing would give a much better picture of how the law is working to give Debtors the intended "Fresh Start."

The Bankruptcy Reform Act hasn't even had time to cycle 8 years so all those who filed Chapter 7 right before the law change are not included in any Chapter 7 (approx 70&) filings in the past six years of statistics.

[Raymond Bell]

Finally and a thanks to Mr. Winward for his observation. Refiles may be influencing even today's numbers. If a debtor's case is dismissed, the debtor can refile. Now we have two filings versus one. A professional said many years ago that people are going to file bankruptcy because of income, regardless of what the law says or is suppose to say.Some take a position that consumers were told they cannot file, or filing is against the law. Likely this may be possible. However, consumer attorney fees increased and almost to a point that consumers who needed and still do need bankruptcy protection cannot afford it.Predicting bankruptcy filings is difficult as there are so many influences that can swing filing numbers up and down.However, I respect the attempts and they should continue. Some day, and not likely in my time, accurate data will help to predict trends or forcasts much better.