ABI and AACER Agree on July Bankruptcy Filings - The Heat Rose
The American Bankruptcy Institute (ABI) and Automated Access to Court Electronic Records (AACER) recently announced that bankruptcy filings are continuing to rise after looking at the statistics from July.
According to the ABI, there were 94,124 consumer bankruptcy filings last month, which is a 48 percent increase from the same month a year ago.
July bankruptcy filings also represented a 13.2 percent increase from June of this year, when there were 82,770 consumer bankruptcy filings. The ABI also reported that 32.5 percent of the consumer bankruptcy cases in July were Chapter 13 bankruptcy filings.
AACER reported that there were 96,355 filings in July, which is a daily filing bankruptcy rate of 4,380 bankruptcy filings when divided by the 22 business days in the month. July 2008 bankruptcy numbers also represented a 2.4 percent increase from June and a 33.2 percent increase from July 2007.
Although the numbers differ slightly, the ABI and AACER agree that the numbers are continuing to rise. Bankruptcy filings have hit their highest level since 2005 when the U.S. bankruptcy laws changed, according to Credit Slips Blog author and University of Illinois Law Professor Robert Lawless.
What Do These Statistics Mean?
As Lawless' Credit Slips Blog post notes, it is important to consider a few facts before when interpreting these bankruptcy filing headlines in your local paper.
For example, bankruptcy filings were up from June to July but these numbers don't show the fact that July has one more business day.
When monthly filing numbers are compared, they are greatly affected by how many business days are in a month. Instead of focusing on the total number of filings, it is important to look at the daily filing rate.
Lawless also notes that it is more important to look at the long-term numbers and trends than to focus solely on one month's numbers. With that said, Lawless suggests that the continually increasing numbers are somewhat of a red flag.
Summer month numbers are known to typically illustrate a plateau for filing bankruptcy with few monthly increases; however, July's numbers skewed this trend.
As of now, nothing can be said as to if this is a new trend, but the figures from August will help us to see if there is a new development in bankruptcy filings. If we continue to see increases in August, then it could be another sign of the increasing economic pressures we are under.
After July's figures, Lawless seems pretty certain that where will be more than 1 million bankruptcy filings in 2008.
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