Bankruptcies, Especially Business Cases, Down in First Half of 2011

Bankruptcy filings dropped by 8% in the first half of 2011 when compared to the same period in 2010. A total of 745,968 cases were filed in the first six months of the year, down from the 810,209 cases filed during the same period last year.

The decline in business filings was even sharper, with business cases for the six-month period ending June 30 decreasing by 15% to 24,680. Chapter 7 business liquidations also fell by 15%, with 17,284 in the first half of 2011 and 20,385 during the same period in 2010. Chapter 11 business filings registered the sharpest decrease, falling 16% from last year's total.

The overall 8% drop was driven largely by a separate decline in filings by individuals or households. Consumer cases fell by 8% to 721,288 in the first six months of 2011, compared to the 2010 total of 781,150. Consumer Chapter 7 cases decreased by 9% and Chapter 13 cases fell by 3%.

"The broad trend of a leveling or even decline in consumer bankruptcies in tandem with a sluggish economy is a reflection of the deleveraging of household debts and tightening of consumer credit over the past year," said Samuel Gerdano, executive director of the American Bankruptcy Institute. "Should these trends persist, we expect to see fewer consumer bankruptcies in 2011 than were filed in 2010."

On a quarterly basis, total bankruptcies actually increased by 4% in the second quarter, from 366,178 in the first, to 379,790 in the second. Consumer bankruptcies fueled the increase, rising by 4% in the second quarter, while business filings fell by 1% in the same period.

Locally, a number of districts experienced increases when considered over the 12-month period ending on June 30, 2011. While Nevada retained its title as the state with the highest per capita filing rate in the country, significant increases in total filings over the 12-month period were seen in the Southern District of Florida (15.1%), the Central District of California (13%) and the District of Utah (12.8%). A total of 19 of the nation's 94 districts experienced an increase in the last year.

Jacob Barron, NACM staff writer