The casualty count from the subprime-induced credit crisis is surging.
In the official tally of U.S. bankruptcy filings, business bankruptcies led the way, soaring 43.9 percent for 2007 — to 28,322, up from the record low of 19,695 filings made in 2006. Experts noted that the 2006 lows reflected implementation of tough new bankruptcy rules.
Total U.S. bankruptcy filings were up 37.8 percent last year, according to the report, from the Administrative Office of the U.S. Courts. And the AOUSC said that the 2007 filing totals mark increases across all chapters of the Bankruptcy Code, for both consumer and business filings.
In the 2007 fourth quarter total business filings totaled 7,985, a 43 percent increase year-to-year, and up 11.4 percent from the third quarter.
The chapter breakdown of business filings for the fourth quarter was 5,420 for Chapter 7, 1,612 for Chapter 11, 77 for Chapter 12, and 869 for Chapter 13.
States with the highest per capita filing rate for the full year were Tennessee, Georgia, Alabama, Indiana and Michigan.
Districts with the highest percentage increase in total flings in 2007 are District of Nevada (98.5 percent), Eastern District of California (93.6 percent), Central District of California (91.2 percent), Southern District of California (82.9 percent) and District of Maine (74.2 percent).
Districts with the lowest percentage increase in total filings for the full year are District of the Virgin Islands (0.0 percent), District of the Northern Mariana Islands ( 0.0 percent), District of Montana (1.8 percent), Western District of North Carolina (8.9 percent) and Middle District of North Carolina (11.3 percent).
Chapter 7 of the Bankruptcy Code is available to both individual and business debtors. Its purpose is to achieve a fair distribution to creditors of the debtor’s available non-exempt property. Unsecured debts not reaffirmed are discharged, providing a fresh financial start.
Chapter 11 is available for both business and consumer debtors. Its purpose is to rehabilitate a business as a going concern or reorganize an individual’s finances through a court-approved reorganization plan.
Chapter 12 is designed to give special debt relief to a family farmer with regular income from farming.