First quarter bankruptcy filings across the U.S. rose 70 percent compared to the first three months of 2006, according to statistics complied by Jupiter eSource LLC from Oklahoma City, Oklahoma.Total filings in the first quarter of 2007 were 188,000, compared to 110,000 in the first three months of 2006. Ninety-five percent of the filings were by individuals and five percent by businesses. The ratio between business and individual filings was unchanged from year to year.
A larger share of the individual filings this year were in chapter 7 than chapter 13. In the first quarter, chapter 7s were 60 percent of filings, compared to 54 percent in the same period in 2006.
In chapter 7, an individual receives a discharge from old debts without making any payments in the future. Under chapter 13, an individual must make some payments to creditors in future years and does not receive a discharge unless the payments are made.
Chapter 11 filings were little changed from year to year. In this year's first quarter, 1,360 companies sought reorganization relief. In the 2006 first quarter, chapter 11 filings totaled 1,348.
Bankruptcy filings spiked before new and more restrictive bankruptcy laws for individuals became effective in October 2006. According to the Administrative Office of the U.S. Courts, 630,000 bankruptcy petitions were filed in the first 16 days of October 2005 before the new laws became effective.
For calendar 2005, 2.08 million American sought bankruptcy relief. After the new laws went into effect, filings in calendar 2006 fell b 71 percent, to approximately 600,000.
A group of five civil rights organizations called for a six-month moratorium yesterday halting foreclosures of subprime mortgage loans. The group said it is looking to prevent families from losing their homes as a result of "unaffordable" mortgages containing "payment shock" resulting from "reckless subprime lending." Subprime loans have a "disproportionate impact on African-American and Latino communities," according to Wade Henderson, president of the Leadership Conference on Civil Rights.
The group includes Leadership Conference on Civil Rights, the National Association for the Advancement of Colored People, the National Fair Housing Alliance, the National Council of La Raza, and the Center for Responsible Lending.
