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Just the Facts: Consumer Bankruptcy Filings, 2006-2017

Just the Facts: Consumer Bankruptcy Filings, 2006-2017

By In Bankruptcy On July 3, 2018


Just the Facts is a feature that highlights issues and trends in the Judiciary based on data collected by the Judiciary Data and Analysis Office (JDAO) of the Administrative Office of the U.S. Courts. Bankruptcy can provide a fresh financial start for consumers who cannot pay their debts, either because of insolvency or insufficient income to meet creditor demands. Bankruptcy generally works in one of two ways: liquidating assets to pay one’s debts under Chapter 7 of the U.S. Bankruptcy Code, or establishing a repayment plan under Chapter 13 of the code. Under a Chapter 7 liquidation, a debtor generally can achieve a fresh financial start more quickly than under a Chapter 13 repayment plan, which can last up to five years. However, under Chapter 13, a debtor may be able to save a home from foreclosure, reschedule secured debts and extend them over the life of a Chapter 13 plan (possibly lowering the payments), or consolidate debt payments to a trustee who then handles distribution to creditors.
  • In the 12-year span from October 1, 2005 to September 30, 2017, about 12.8 million consumer bankruptcy petitions were filed in the federal courts. Of those, 8.7 million–68 percent–were filed under Chapter 7, and 4.1 million– 32 percent–were filed under Chapter 13 (see Table 1). Nonbusiness filings (i.e., filings involving mainly consumer debt) constituted 97 percent of all Chapter 7 bankruptcies and 99 percent of all Chapter 13 bankruptcies.
  • In 2005, Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), which among other things, instituted a means test for filers to move some away from filing for bankruptcy under Chapter 7 and towards filing under Chapter 13. The goal of the BAPCPA is to have petitioners in Chapter 13 devote disposable income over three to five years to pay unsecured creditors. A person may file for bankruptcy under Chapter 7 only if her or his monthly income over six months prior to filing for bankruptcy is below the state median for a similar household, or if the debtor’s monthly disposable income falls below a threshold established by a statutory means test.
  • Following the last recession (December 2007 to June 2009), overall bankruptcy filings peaked in 2010. Chapter 7 consumer bankruptcy filings have declined since 2010, (see Chart 1) and Chapter 13 filings have leveled off in the last few years (see Chart 2).
  • The percentage of total filings that Chapter 7 filings accounted for has declined since 2010, whereas the percentage of total filings under Chapter 13 filings has increased (see Chart 3). We cannot say with certainty, however, that BAPCPA caused this phenomenon.
  • Table 2 shows the 25 federal judicial districts in which Chapter 13 consumer bankruptcy filings constituted the highest percentage of total consumer bankruptcy filings from 2006 to 2017. Of these districts, 23 (92%) are in southern states. Map 1 also shows that the districts with the highest numbers of Chapter 13 consumer bankruptcies per 1,000 inhabitants were concentrated in the South.
  • In 2016, the five states with the highest rates of Chapter 13 bankruptcy were Alabama (1 in 112 households), Tennessee (1 in 119), Georgia (1 in 135), Louisiana (1 in 179), and Mississippi (1 in 190). The state with the lowest rate was Alaska (1 in 4,359 households). Nationally, there was one Chapter 13 filing for every 405 households in 2016.  (see Table 3).
Table 1 Nonbusiness Bankruptcy Filings by Year
Fiscal Year Total  Nonbusiness Bankruptcies Chapter 7 Nonbusiness Bankruptcies Nonbusiness Chapter 7 Filings as a Percentage of Total Nonbusiness Filings Chapter 13 Nonbusiness Bankruptcies Chapter 13 Nonbusiness Filings as a Percentage of Total Nonbusiness Filings
2006 1,085,209 814,850 75.09% 269,699 24.85%
2007 775,344 467,248 60.26% 307,521 39.66%
2008 1,004,171 653,319 65.06% 350,015 34.86%
2009 1,344,095 949,002 70.61% 393,786 29.30%
2010 1,538,033 1,105,534 71.88% 430,583 28.00%
2011 1,417,326 1,001,813 70.68% 413,699 29.19%
2012 1,219,132 845,470 69.35% 372,132 30.52%
2013 1,072,807 730,592 68.10% 340,807 31.77%
2014 935,420 623,349 66.64% 310,914 33.24%
2015 835,197 533,572 63.89% 300,528 35.98%
2016 781,123 483,176 61.86% 296,824 38.00%
2017 767,721 472,135 61.50% 294,500 38.36%
TOTAL 12,775,578 8,680,060 67.94% 4,081,008 31.94%
Source: Table F-2 for the 12-month periods ending September 30, 2006 Through 2017.
Table 2. Nonbusiness Bankruptcy  Filings in 25 Federal Judicial Districts Where Chapter 13 Filings Constituted the Highest Percentage of Total Nonbusiness Filings, FY 2006-2017
District Total Nonbusiness Filings Total Nonbusiness Chapter 13 Filings Percentage
1 Georgia, Southern 104,160 81,285 78.0%
2 Alabama, Middle 88,951 66,417 74.7%
3 Louisiana, Western 121,720 89,541 73.6%
4 Tennessee, Western 207,042 151,992 73.4%
5 Alabama, Southern 57,701 39,659 68.7%
6 Puerto Rico 117,500 76,763 65.3%
7 Georgia, Middle 120,307 77,022 64.0%
8 North Carolina, Eastern 101,163 64,543 63.8%
9 South Carolina 91,931 53,863 58.6%
10 Texas, Southern 142,263 81,862 57.5%
11 Texas, Northern 182,979 101,877 55.7%
12 North Carolina, Middle 65,532 34,846 53.2%
13 Mississippi, Northern 64,654 34,052 52.7%
14 Alabama, Northern 187,511 98,408 52.5%
15 Arkansas, Eastern 95,974 50,163 52.3%
16 Texas, Eastern 69,983 34,389 49.1%
17 Texas, Western 119,132 57,107 47.9%
18 Louisiana, Eastern 43,624 20,161 46.2%
19 Mississippi, Southern 81,680 37,550 46.0%
20 Tennessee, Middle 132,518 59,440 44.9%
21 Georgia, Northern 467,406 208,131 44.5%
22 Louisiana, Middle 21,701 9,633 44.4%
23 Tennessee, Eastern 164,994 69,596 42.2%
24 Arkansas, Western 56,817 23,378 41.1%
25 Illinois, Southern 60,165 23,404 38.9%
Source: Table F-2 for the 12-month periods ending September 30, 2006 Through 2017.
Source: http://www.uscourts.gov/news/2018/03/07/just-facts-consumer-bankruptcy-filings-2006-2017