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Bankruptcy Boomerang

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The magnitude of bankruptcy in the U.S. over the past year is mind-boggling as both big corporations and little people hit the door. This week’s filing by Conseco Finance, last week’s filing by United Airlines, and the record number of personal bankruptcy filings, demonstrate the non-discriminatory nature of the 2001-02 recession. Bankruptcy filings for the twelve month period ending September 30th totaled 1,547,669, up 7.7% from the 1,437,354 bankruptcy filings for the same period one year ago. For the third quarter, the total number of bankruptcy filings hit 401,306, the highest quarterly level ever. According to the Administrative Office of the U.S. Courts, non-business or personal bankruptcy filings, which make up the majority of bankruptcy filings, also broke records with a total of 1,508,578, up 7.8% fro 2001. The number of Chapter 7 filings rose 6.9% from the previous fiscal year to 1,084,336. Chapter 13 filings rose 9.5% to 451,258. According to industry data gathered by CardData, bankruptcy losses account for 46.9% of the credit card write-offs incurred by larger issuers, and 41.3% of the charge-offs sustained by smaller issuers.

            Business and Non-Business Filings
           Years Ended September 30, 1998-2002

    FY Business          Non-Business    TOTAL
    2002 39,091             1,508,578   1,547,669
    2001 38,490             1,398,864   1,437,354
    2000 36,065             1,226,037   1,262,102
    1999 38,625             1,315,751   1,354,376
    1998 47,125             1,389,839   1,436,964
Source: Administrative Office of the U.S. Courts

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