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Bankruptcy Surge

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The second quarter number of bankruptcy filings hit 200,732, an 11.6% increase over the first quarter and a 40.6% growth over the second quarter of 2006. The surge is driven by a major fall-out in the sub-prime mortgage market and rising interest rates impacting all borrowing products. During the first quarter total filings hit 193,461 compared to 177,599 for the fourth quarter and 116,771 one-year ago. However, according to the Administrative Office of the U.S. Courts filings in the 12-month period ending March 31st, 2006, when bankruptcy cases totaled 1,794,795, the latest figures represented a 61% drop in filings. The 12-month period ending March 31, 2006, included the surge in filings that occurred prior to the October 17, 2005, implementation date of the “Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.” Lundquist Consulting’s The National Bankruptcy Research Center says the second quarter marks the fifth consecutive increase in bankruptcy filings since the first quarter of 2006. The number of Chapter 13 filings in the second quarter represents 37.3% of total filings, and Chapter 7 filings represent 62.5%. Chapter 7 filings grew faster than all other chapters, increasing by 16.4% in the second quarter, compared to a 4.6% increase in Chapter 13 filings.

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