Bankruptcy

Bankruptcy Filings Reset Post-2005 Record

By Bob Lawless

September 2008 bankruptcy filings are up 1.9% from the previous month and up 28.8% from the same month one year before. That is an annual growth rate of 25.3%. Those figures represent an average of 4,574 bankruptcy petitions were filed for every business day in September. The total number of bankruptcy petitions filed in September was 96,049. As always, many, many thanks to the good people at AACER who make these monthly updates possible.

As the line graph shows, bankruptcy filings have been increasing steadily over the past twenty-one months. In fact, the bankruptcy filing rate in September 2008 is 65.6% higher than it was in January 2007. September 2008 was the third straight month in a row that bankruptcy filings reset the post-2005 record for the monthly filing rate. The bankruptcy filing rates here are daily rates. When I calculate monthly filing rates, I always look at them on "filings per business day" basis because the total number of filings in a month are very sensitive to the total number of business days.

The estimate for the total number of bankruptcy in the 2008 calendar year keeps creeping closer to 1.1 million. For the 2008 calendar year, bankruptcy filings will be:

• 1,060,000 filings if bankruptcy filings continue for the rest of the year at the same daily rate (4,208 per day) as they have averaged for the first nine months of 2008
• 1,083,000 filings if bankruptcy filings continue for the same daily rate (4,574 per day) as they have averaged for August 2008
• 1,092,000 filings if bankruptcy filings for the remaining three months of 2008 constitute the same proportion of total filings as the last three months of 2007 constituted for total filings that year (about 26.89%)

I think the lower estimate is probably unrealistic because the daily filing rate would have to drop over the last three months of the calendar year, and that is unlikely given the current economic situation. I make these estimates each month, and the upper bound has generally hovered about 1,080,000 to 1,090,000. It looks like we may just miss 1.1 million filings for the calendar year but just barely. If the economic crisis causes bankruptcy filings to surge even slightly, we'll go over the 1.1 million mark easily.

Full post as published by Credit Slips on October 02, 2008 (boomark / email).