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Bankruptcy Filings Decline in FY 2006
Bankruptcy cases filed in federal courts tumbled in fiscal year 2006. Filings
for the 12-month period ending September 30, 2006, fell 37.6 percent to
1,112,542, from total filings of 1,782,643 in FY 2005. The federal Judiciary’s
fiscal year is the 12-month period ending September 30. The bankruptcies
reported are for October 1, 2005 through September 30, 2006.
The FY 2006
figures include most of the filings that were part of the surge in filings
prompted by the October 17, 2005, implementation date of the Bankruptcy Abuse
Prevention and Consumer Protection Act of 2005; filings began to rise in late FY
2005 and peaked as over 600,000 petitions were filed in the first 16 days of
Business, Non-Business &
Business bankruptcies for FY 2006 fell 20.1 percent to
27,333 from the 34,222 business bankruptcies filed in FY 2005. Non-business or
personal bankruptcies fell 37.9 percent in FY 2006, from 1,748,421 in FY 2005 to
1,085,209 in FY 2006.
In FY 2006, filings under Chapters 7, 11, and 13
of the Bankruptcy Code fell, while filings under Chapter 12 rose slightly. The
largest decline was in Chapter 7 filings.
- Chapter 7 filings in FY 2006 totaled 833,147, down 38.1 percent from
1,346,201 in FY 2005.
- Chapter 11 filings dropped 9.6 percent, falling from 6,637 in FY 2005 to
6,003 in FY 2006.
- Chapter 13 filings declined 36.4 percent, falling from 429,316 in FY 2005 to
272,937 in FY 2006.
- Chapter 12 is designed to meet the needs of financially distressed family
farmers. In FY 2006, Chapter 12 filings totaled 376, up 3.3 percent from the 364
cases filed in FY 2005.
Fourth Quarter Filings
Filings for the Judiciary’s
fourth quarter, the 3-month period ending September 30, 2006, fell to 171,146,
down 68.4 percent from the 542,002 bankruptcy cases filed in the final quarter
of FY 2005.
Implementation of Bankruptcy Act Strained Judiciary
In early December 2006, an oversight hearing on the
implementation of the Bankruptcy Abuse Prevention and Consumer Protection Act
was held by the Senate Judiciary Committee Subcommittee on Administrative
Oversight and the Courts. Judge Thomas S. Zilly (W.D. Wash.), chair of the
Judicial Conference Advisory Committee on Bankruptcy Rules, submitted a
statement on behalf of the Conference.
Zilly said that implementing
within six months the provisions of the Act, which exceeds 500 pages and affects
virtually every aspect of bankruptcy cases, had presented the federal Judiciary
with “an unprecedented challenge.” The Judiciary met the challenge, Zilly told
the subcommittee, despite the immense amount of work and cost involved. He noted
that a major segment of the federal Judiciary was required on a short timetable
to modify or develop new rules, forms, court procedures, computer software
programs, statistical reports, manuals, and training programs and to address a
host of other tasks.
“The added demands of the Act have increased the
already enormous pressures to cope with the day-to-day responsibilities in the
administration of justice,” said Zilly, “straining the federal Judiciary’s
personnel and resources.” Zilly’s complete testimony is on-line at
For more on bankruptcy and its
chapters, see the Judiciary’s “Bankruptcy Basics” at www.uscourts.gov/bankruptcycourts/bankruptcybasics.html or
visit www.fjc.gov/federal/courts.nsf. Local bankruptcy court rules
can be found at www.uscourts.gov/rules/bk-localrules.html. Historic data on
bankruptcy filings is available on www.uscourts.gov/bnkrpctystats/bankruptcystats.htm. Additional
bankruptcy statistics, including bankruptcies by county, can be found on the
Judiciary’s PACER system.