Bankruptcy Filings Jump in 2007

Bankruptcy filings appeared to skyrocket last year, though the jump was attributable in part to a comparatively low number of filings in 2006.

Bankruptcy filings in the U.S. totaled 850,912 in calendar year 2007, a rise of nearly 38 percent from calendar 2006, according to the Administrative Office of the U.S. Courts. The 2006 numbers were reduced by the October 2005 implementation of changes in the federal bankruptcy law. Bankruptcy filings set a record in 2005 with more than 2 million filings by consumers and businesses seeking to beat the law change. In both 2003 and 2004 there were about 1.6 million filings.

In 2007, there were 519,364 Chapter 7 bankruptcy filings, up nearly 44 percent from 2006. There were 324,771 Chapter 13 filings, up nearly 30 percent from 2006.

The 2005 law was intended in part to send more consumers from Chapter 7 bankruptcy into Chapter 13, where they were required to work out a payment plan for a portion of their debts. Most debts are forgiven under a Chapter 7 filing.
 
There were 28,322 business bankruptcy filings last year, up nearly 44 percent from 2006.

The Administrative Office also announced filing results for its fiscal first quarter of 2008, which were the last three months of calendar year 2007. There were a total of 226,413 bankruptcy filings in the fiscal first quarter of 2008, up 27 percent from the same period in the previous fiscal year.