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For Second Year in a Row, Bankruptcy Filings Fall

A recent report submitted to Congress shows that consumer bankruptcy filings have fallen for the second year in a row. This post will discuss some of the interesting findings from this report.

The BAPCPA Report

In 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”) was signed into law by President George W. Bush. As part of BAPCA, the Director of the Administrative Office of the United States Courts is required to submit an annual report to Congress containing certain bankruptcy statistics. The statistics are compiled by the clerks of the bankruptcy courts and relate to consumers who file Chapter 7, Chapter 11, and Chapter 13 bankruptcy.

bankruptcy lawAccording to the BAPCPA Report, which you can read in full here, the number of bankruptcy filings has fallen for the second year in a row. In 2012, consumers filed a total of 1.1 million bankruptcy petitions. This was a 14 percent decrease from the number of consumer bankruptcies filed in 2011. 2011 bankruptcy filings were down from 2010, too – by a total of 11 percent.

Of the total number of consumer bankruptcies filed in 2012, a slightly smaller percentage were Chapter 7 cases than in the previous year. In 2011, the percentage of consumer bankruptcies filed under Chapter 7 of the Bankruptcy Code totaled 70 percent. In 2012, this number decreased to 69 percent.

The percentage of consumer bankruptcies filed under Chapter 13 increased. In 2011, only 30 percent of consumer bankruptcies were filed under Chapter 13 of the Bankruptcy Code. In 2012, this number increased to 31 percent.

Consumer debtors who filed bankruptcy in 2012 reported holding assets in the aggregate amount of $140 billion. They reported total liabilities in the aggregate amount of $218 billion. The total assets reported by consumer bankruptcy filers fell by 18 percent from 2011 to 2012. This excludes one debtor who filed a total of $50 billion in assets in a 2011 filing. The total liabilities also fell from 2011 to 2012 – by 22 percent.

2012 Bankruptcy Statistics

The BAPCPA Report contains a number of other interesting statistics about consumer bankruptcy filings in 2012.

  • The median average monthly income reported by all consumer bankruptcy filers was $2,743.
  • The median average monthly expenses reported by all consumer bankruptcy filers was $2,769.
  • In 2012, the average time it took to complete a Chapter 7 bankruptcy (from start to finish) was 205 days (or 7 to 8 months).
  • In 2012, 30 percent of Chapter 13 filers had filed for bankruptcy within the previous eight years.
  • A total of 289,125 Chapter 13 bankruptcy cases filed on or after October 17, 2006 were closed by dismissal or plan completion during 2012.

Creditor Misconduct and Punitive Damages

The Bankruptcy Code provides for fines to be assessed against creditors for misconduct. The BAPCPA Report includes statistics about creditor misconduct and punitive damages. Punitive damages may also be assessed against creditors that engage in litigation misconduct during bankruptcy proceedings. It is important to understand that creditor misconduct and punitive damages may not be reported uniformly across all districts.

  • In 2012, creditors were fined for misconduct in 141 bankruptcy cases.
  • $56,000 in punitive damages were assessed in 11 of the above-mentioned 141 cases closed in 2012.

If you are considering filing bankruptcy, the statistics from the BAPCPA Report demonstrate that you are not alone.

An experienced bankruptcy attorney can help you understand your rights under the Bankruptcy Code. For a free and confidential consultation with an Orange County bankruptcy attorney, call Spaulding Law Group at (714) 731-7595.

Image courtesy of Flickr user walknboston pursuant to a Creative Commons CC BY 2.0 license.

About the Author
Christian Spaulding is the founder and principal attorney at Spaulding Law Group. Mr. Spaulding has lived in Southern California his entire life and his family has been in Southern California since the late 1800’s. Mr. Spaulding received his undergraduate degree from Chapman University in Orange with a Bachelor of Science in Accounting. While completing his undergraduate studies, Mr. Spaulding was the recipient of the prestigious Wall Street Journal Student Business Award. Mr. Spaulding graduated at the top of his accounting program at Chapman University and attended law school at Chapman University School of Law where he was a Merit Scholarship recipient. Mr. Spaulding has focused his firm’s practice solely on consumer protection and bankruptcy since 2009.

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