Bankruptcy filings dip 2.6 percent in fiscal year 2004

Daily Journal of Commerce (Portland, OR), Jan 27, 2005 by Emily Umbright, St. Louis Daily Record

(This article originally ran in The Daily Record, St. Louis, MO, another Dolan Media publication). While economists are celebrating a new year, final bankruptcy tallies calculated by the Administrative Office of the U.S. Courts could provide a purpose for more revelry.

That's because bankruptcy statistics dipped 2.6 percent in fiscal year 2004, according to the AOUSC, which has a fiscal year spanning from Oct. 1, 2003, to Sept. 30, 2004.

This is the first decrease since the filings began their upward climb in FY2000 with 1,262,102 and ending at FY2003's high of 1,661,996. With a portion of the FY2004's calculations including the last part of 2003, the numbers could indicate a decline.

First-quarter numbers in FY2004 plummeted from 412,989 filings in FY2003's last quarter to 393,348. While FY2004's highest number of filings was reported during its third quarter, ending June 30 with 412,110 bankruptcy cases, its fourth-quarter tallies sank back to lows in line with the beginning of the year, with 396,438 filings in September.

Nonbusiness bankruptcies, which dropped 2.6 percent in FY2004, made up most of the bankruptcy cases with 1,584,170 incidents. Meanwhile, business bankruptcies fell 3.8 percent to 34,817 filings from 36,183 in FY2003.

Nevertheless, the numbers remain well above the 1.5 million historic high first set in 2002, and as the AOUSC points out, no new bankruptcy judgeships have been added since 1992, when bankruptcy levels were at 977,478 filings. This year, Chapter 11 filings rose 2.2 percent over FY2003's total 10,144 filings to 10,368.

Chapter 7 filings, however, were down 2 percent to 1,153,865 filings from the FY2003 total of 1,177,292 instances, and Chapter 13 bankruptcies decreased 4.1 percent from 473,763 filings in FY2003 to 454,412 filings in FY2004. The biggest plunge came from Chapter 12 cases, geared toward financially distressed family farmers. These filings plummeted 65.9 percent to 238 cases in FY2004 from 698 cases in FY2003. The AOUSC attributes the low number to a lapse in December 2003 filings.

Individual states topping the list of most bankruptcies included, in descending order, California, Texas, Ohio, Florida and New York. Excluding the U.S. territories and the District of Columbia, the states with the lowest bankruptcy numbers included, in ascending order, New Mexico, Alaska, Vermont, North Dakota and Wyoming.

Despite the highs and lows attributed to population and the flexibility of bankruptcy laws, FY2004 numbers appear to indicate a break in the climbing rates of bankruptcy as the economy improves.