Bankruptcy filings by companies and individuals continued their steady climb in September, setting records since bankruptcy laws were tightened three years ago. The increase was largest in states where housing prices fell most and foreclosures are rising fastest.
Filings by companies hoping to reorganize in Chapter 11 through the first nine months of 2007 are on track to total 9,200 for the year, a 47 percent increase over 2007. Including businesses filing to liquidate in Chapter 7, the 61,200 annualized filings represent a 43 percent increase over 2007 and more than twice the filings in 2006.
At 76 percent, California led the nation with its increase in daily average filings over 2007. The three next largest increases are Arizona, Nevada and Florida, states hard-hit by falling home prices and rising foreclosures. The statistics were compiled from government records by Automated Access to Court Electronic Records, a service of Jupiter ESources LLC in Oklahoma City.
The states with the largest per-capita filings this year present a different picture. Aside from Nevada, none are typically seen as hotbeds of falling home prices.
Tennessee led the U.S. with 7.41 filings per 1,000 population, followed by Nevada with 6.95 per 1,000.
Georgia, Alabama and Indiana were in third through fifth places, with a filing rate hovering around 6 per 1,000 population.
September set a record for the largest number of daily filings since Congress changed bankruptcy laws in October 2005. The 96,000 Americans seeking protection under all available types of bankruptcy have the country headed toward at least 1,065,000 filings this year. At the current rate, total filings will be 30 percent higher than 2007 and 80 percent above 2006.
Filings by consumers soared just before revisions to bankruptcy law took effect in October 2005 and made it more difficult for individuals to erase their debts.
In the two weeks before the new law, 630,000 Americans sought bankruptcy protection, bringing total filings in 2005 to a record 2.1 million. There were 590,500 filings in 2006 and 827,000 in 2007. Almost 800,000 bankruptcy petitions were filed in 2008 through the end of September.
