Personal Bankruptcies Increase as Business Filings Drop

WASHINGTON-Total bankruptcy filings continue to reach record highs for the third consecutive year as of the end of fiscal year 2003 (ending Sept. 30), the Administrative Office of the U.S. Courts recently announced. Bankruptcy filings, at 1,661,996 for this year, have increased 98% since 1994 when there were 837,797. This year’s data was up 7.4% from FY 2002 when there were 1,547,669 filings. “Recognizing that the numbers continue to rise on bankruptcy, there is still a good opportunity for bankruptcy reform,” NAFCU Director of Legislative and Political Affairs Brad Thaler said of next year. “All the issues and factors and concerns about abuse that have been there before continue to be there, and I think there’s a recognition of that by a lot of people on the Hill.” One positive point, the courts reported, is that business bankruptcies fell 7.4% to 36,183 in FY 03. Non-business bankruptcies now account for 97.8% of all bankruptcies filed in federal courts. On the other hand, farm bankruptcies (Chapter 12) had their first increase in several years (See charts). Additionally, the number of filings in the last quarter, 412,989, fell from 440,257 the previous quarter. Total Chapter 7 filings reached nearly 1.2 million in FY 03, up 8.6% from the previous year. In addition to preventing bankruptcy abuse, the bill currently in Congress is aimed at pushing more people to file Chapter 13 where some or all of the debt is repaid in installments as opposed to Chapter 7 where the filer keeps certain exempt properties and the rest is sold to repay the lenders. Chapter 13 filings rose 5% in FY 03 to 473,763. The overall growth has led the number of filings per judgeship to 5,130 as opposed to 2,998 in FY 1992. No new federal bankruptcy judges have been added since 1992. -