The United States Courts just released the complete bankruptcy survey for 2010 bankruptcies. It shows that the majority of bankruptcy filings are for Chapter 7. Here is what the 2010 results show. I’ve highlighted the parts that stood out to me.
Summary of Findings
During calendar year 2010, more than 1.5 million bankruptcy petitions were filed by individuals with predominantly nonbusiness debt, an increase of 9 percent over the number of filings in calendar year 2009. Approximately 71 percent of these cases, the same percentage as in 2009, were filed under chapter 7, in which a debtor’s assets are liquidated and the nonexempt proceeds are distributed to creditors. About 28 percent, down from 29 percent in 2009, were filed under chapter 13, in which individuals who have regular income and debts below a statutory threshold make installment payments to creditors pursuant to a courtconfirmed plan. One percent of the cases were filed under chapter 11, which allows businesses and individuals to continue operating while they formulate plans to reorganize and repay their creditors.
More than 1.4 million consumer cases—that is, cases with predominantly nonbusiness debt—were closed during calendar year 2010. Of these, approximately 1.3 million (about 92 percent of the total) were filed after October 17, 2006, and therefore lie within the scope of the reporting requirement.
Approximately 85 percent of the 1.3 million closed consumer cases included in the data analyzed for this report were closed under chapter 7, about 15 percent were terminated under chapter 13, and fewer than 1 percent were closed under chapter 11. Since the duration of a typical chapter 11 case or chapter 13 case is three to five
years, closings under these chapters are somewhat underrepresented in the data analyzed in this report. Likewise, closings under chapter 7 are overrepresented relative to the total population of cases closed by the bankruptcy courts in 2010. Consumer debtors seeking bankruptcy protection under chapters 7, 11, or 13 during 2010 reported holding total assets in the aggregate amount of $407 billion and total liabilities in the aggregate amount of $473 billion. However, two debtors—one each in the Western District of Washington (WA-W) and the Southern District of Texas (TX-S)—accounted for nearly $200 billion of these assets and $100 billion of these liabilities. Excluding the assets and liabilities of those two debtors, the total assets reported by all other consumer debtors rose 5 percent over the comparable 2009 numbers, and the total liabilities for the same set of cases rose 15 percent over the comparable data for 2009. (When considering the magnitude of these increases, recall that consumer filings in 2009 rose 9 percent over the previous year.) The median average monthly income reported by all debtors was $2,800 (3 percent higher than 2009), and the median average reported monthly expenses were $2,872 (2 percent higher than 2009).
From filing to disposition, chapter 7 consumer cases closed in 2010 had a mean time interval of 178 days and a median time interval of 120 days. A total of 359,972 reaffirmation agreements were reported as filed in 251,243 chapter 7 consumer cases terminated during 2010. In 26 percent of the chapter 13 cases filed during 2010, debtors indicated they had filed for bankruptcy during the previous eight years, 2 percent fewer than in 2009. – SourceBankruptcy 2010 Annual Report Out. Chapter 7 Still Mac Daddy. by Steve Rhode