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May 2013 Bankruptcy Filing Numbers Continue Trend

posted by Bob Lawless

The latest data from Epiq Systems are available, and they confirm my estimate last month of just over 1.0 million bankruptcy filings for the 2013 calendar year. Epiq Systems reports 96,430 bankruptcy filings for the month of May. Spread over the 22 business days in the month, that is a daily filing rate of 4,383. The daily filing rate is a 12.0% decline on a year-over-year basis.

If one extrapolates the filing rates from the first five months over the rest of the calendar year, the prediction remains for just over 1.0 million total filings in 2013. This figure would be a 14% annual decline.

Annualized, the bankruptcy filing rate stands at 3.54 filings per 1,000 persons. The last time the filing rate was lower was November 2008, when the bankruptcy filing rate was still experiencing the dip in filings that occurred right after enactment of the 2005 bankruptcy law. If one takes a longer view and considers the filing rate gyrations around 2005 as a statistical anomaly, the last time the filing rate was this low was 1995.

Comments

Interesting - thanks for the stats! I didn't think that it would decline given the hard times people are going through financially nowadays.

does this trend usually signal a strengthening overall economy(increased gdp etc)?

I wonder if the decline in bankruptcies is because the economy is getting better or because the majority of people/companies that were in bankruptcy "territory" the past few years have already filed. Just because the rate is declining doesn't necessarily mean things are getting better. If the rate continues to stay relatively high then it may mean that folks that previously were no where near bankruptcy are now being pulled into the black hole by a failing economy. I'm hoping that is not the case.

Leslie - based on my intake data, the decline in bankruptcies is because the pool of potential filers is near empty. I use an intake form on my website that asks for total debt and total income. I am seeing an increasing number of people with less than $20k in debt and less than $3K per month in gross income.

I also do a fair number of consults with people who are unemployed or underemployed and decide not to file bankruptcy because either they are judgment proof or they don't see any reason to start the process of rebuilding their credit. I don't think that we are going to see an uptick in bankruptcy filings until the economy improves.

It's good to see the number sinking. It's interesting to note, too, that the stigma related to bankruptcy is also sinking - and the profile of the average filer is changing quite a bit from what it used to be. http://nmbankruptcylaw.com/bankrupt-doesnt-mean-irresponsible/#more-1639 Maybe this is in part due to the increase in bankruptcies in the last 5,10 years, and how bankruptcy has seemed to come upon average, middle class families much more than it used to.

The first quarter of 2013 household debt/income ratios were just posted. They show a slight increase from fourth quater 2012, most significantly the first increase in the ratios since the end of 2008. This might signal the end of the bankruptcy rate decline.

http://www.federalreserve.gov/releases/housedebt/

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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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