roughly track trends in consumer spending.
2 Since 1990,
the average annual change in filings (either up or down)
at the state level has been 14.5%. However, 2016 has
been an exception, in that the change in filings from
2015 was under 5% in about half of the states and only a
handful of states had changes of more than 10% during
Long Term Filing Trends by State
Last year marked the sixth consecutive year of declines
in bankruptcy filings. This is the longest period on
record of declining bankruptcy filings.
3 Since their most
recent peak in 2010, filings are down by 50% nationwide. Generally, bankruptcy filings have declined less
in most Southeastern states where Chapter 13 is most
popular. The declines have been most dramatic in states
in the Northeast and the Southwest.
If we set 1990 as the baseline year, a somewhat
different picture emerges. National filings in 2016 were
quite close to the same as in 1990. However, since that
time there has been substantial geographic variation in
filing trends. In general, filings have increased in most
Eastern states, with the exception of the New England
region, and have decreased in most Western states.
Chapter 11 Cases
Filings of Chapter 11 cases increased very slightly in 2016
for the second consecutive year. However, even with
these increases, Chapter 11 filings are now only about
half as high as their most recent annual peak in 2009.
2 For example, see: Bob Lawless, “Bankruptcy Filings Will Be the Lowest
Since 1995 — Here Is a Reason Why,” Credit Slips, Aug. 6, 2014,
from 1941 to 1946, coinciding with World Wars I and II.
During 2016, about 795,000 bankruptcy cases were filed nationwide.
1 This was a 6% decline from filings in 2015 and a 50% decline from the
most recent peak in 2010.
Filing Trends by Chapter and State
The 6% decline in 2016 was the smallest annual
change in filings since 2004. Chapter 7 cases were
responsible for most of the decline as Chapter 13
filings were down only slightly in 2016 and Chapter 11
filings actually increased.
During the first nine months of 2016, total filings
and Chapter 7 increased in 10 states and Puerto Rico
compared to the same period in 2015. About 50% of
states reported increases in Chapter 11 and Chapter 13
cases. Comparable maps for filings from 2011 to 2015
would have nearly every state registering a decrease of
all filing types each year.
Bankruptcy filing levels tend to be somewhat volatile from year-to-year. Because most cases are filed by
households with too much consumer debt, filing levels
preliminary data for October and November, we can make fairly precise
estimates of the total activity for 2016.
Bankruptcy Filings Decrease
for Sixth Straight Year in 2016
BY SAMUEL J. GERDANO AND ED FLYNN
For the sixth straight year, fewer bankruptcy cases were filed. American Bankruptcy Institute Executive
Director Sam Gerdano and Consultant Ed Flynn provide a more nuanced look at the patterns that emerged
in 2016 and predicts a quiet year ahead.
SAMUEL J. GERDANO
The last major overhaul of Chapter 11 occurred in 1978. There is an
emerging consensus that Chapter 11 needs an updated toolkit to deal
with new types of lending and increasingly complex debt and capital
structures. The ABI Commission to Study the Reform of Chapter 11
issued its Final Report and Recommendations in December 2014.