Bankruptcy filings in the federal courts rose 31 percent in calendar year 2008, according to data released today by the Administrative Office of the U.S. Courts. The number of bankruptcies filed in the twelve-month period ending December 31, 2008, totaled 1,117,771, up from 850,912 bankruptcies filed in CY 2007. Filings have grown since CY 2006 when bankruptcy filings totaled 617,660, in the first full 12-month period after the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) took effect. An historic high in the number of bankruptcy filings was seen in calendar year 2005, when over 2 million bankruptcies were filed.The chart above illustrates the annual growth in bankruptcy filings through the fourth quarter of 2008. As indicated by the bankruptcy release, this data is subject to discrete shifts in response to new legislation (like in 2005 and 2006). However, the trend is clear: bankruptcies - business and consumer - are surging, 33% over the year in Q4 2008.
The chart illustrates the 2008 trend in bankruptcy filings by type, chapter 7, 11, 12, and 13 (you can see a discussion of the different bankruptcies here). Bankruptcies are up across the board, and the biggest share of bankruptcy filings, Chapter 7, is surging at an annual rate of 47%.
Bankruptcies lag recessions (circles in the first chart). And given the magnitude of this recession, there is still a lot of default and bankruptcy in the pipeline. No wonder Q&A articles on filing for bankruptcy are big news these days.