Bankruptcies Plunge To 20-Year Lows

WASHINGTON – The number of bankruptcies filed for the first nine months of the year fell to a third of what they were last year–one of the major affects of the new bankruptcy reform law. And that’s taking into consideration the almost 600,000 bankruptcies filed in the first two weeks of October last year, skewing the numbers for 2005. From January to September this year, the total number of personal and business bankruptcies fell by 68.5% to 443,750 from the 1.4 million in the same period last year. This year's figure is the lowest since 1987. The data, from the Administrative Office of the U.S. Courts, shows that personal bankruptcy filings fell most sharply, by 69%, while commercial bankruptcies fell 45.9%. The tally of personal bankruptcy filings fell to 429,522 from 1.38 million last year. Business filings fell to 14,228 from 26,275. The new law also shifted the type of cases that are filed. The law effectively increased the number of Chapter 13 filings, in which an individual reorganizes his or her debt, to 41.4% of filings from 22.8% the prior year, while Chapter 7 filings, in which an individual files to erase all of his or her debt, fell to 58.5% of the total from 77.2% in 2005.