Federal bankruptcy filings soared by 30 percent in fiscal year 2008, according to figures released this morning by the Administrative Office of the U.S. Courts.
There were 1,042,993 bankruptcies filed in federal courts during the 12-month period ending September 30, up from 801,269 filings in 2007. The new figures are closer to, but still well below, the kind of numbers that were common before the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. In 2004, for instance, there were 1,618,987 federal bankruptcies, and in 2005 there were 1,782,643.
In 2006, the year the act went into effect, there were 1,112,542 bankruptcies filed.
This year, business bankruptcies saw a particularly dramatic spike, leaping 49 percent to 38,651, compared to 25,925 in 2007. Non-business filings were up 30 percent to 1,004,342, from 775,344.
UPDATE (5:34 P.M.): Bankruptcy experts said they believed that the faltering economy was the major force driving up the number of filings. But noted other factors as well.
Numbers in 2006 and 2007 were artificially low, because so many people with marginal cases filed in 2005, before the new law went into effect, said Paul Daley, a partner in WilmerHale’s bankruptcy practice. He added that lawyers are also beginning to feel more at ease navigating the revised bankruptcy laws, and are therefore more comfortable advising their clients to file.
Tracking bankruptcy is like watching at the economy through a “rear view mirror,” said Sam Gerdano, executive director of the American Bankruptcy Institute. As the country’s economic health has continued to decline, onlookers should expect to see the rate of filings accelerate in the coming months.
“The numbers going forward are going to be high,” Gerdano said.