Feds Release New Report On Bankruptcy Trends

The Administrative Office of the U.S. Courts releases data on bankruptcy filings each quarter. The data gives the Hanson & Payne team a snapshot of the current bankruptcy docket. And it is helpful to dive into the data and see how bankruptcy filings in Wisconsin, and the Milwaukee area in particular, compared to those in other states — something we did in a recent blog post

But it is also good to take a look back over several quarters or years of data and see what sort of trends emerge. That is exactly what the Administrative Office of the U.S. Courts did in a recent report. 

Looking at just nonbusiness filings (which we can assume are personal bankruptcies), it found:

  • In the 16-year span from Oct. 1, 2005, to Sept. 30, 2021, about 15.3 million non-business bankruptcy petitions were filed in the federal courts (i.e., filings involving mainly consumer debt). Of those, 10.3 million – 67 percent of total nonbusiness filings – were filed under Chapter 7, and 5 million – 32 percent of total nonbusiness filings – were filed under Chapter 13.

You may recall that a Chapter 7 bankruptcy is a fresh start bankruptcy. Assets are liquidated, most debts are wiped out, and the filer moves forward with a clean slate. In a Chapter 13 bankruptcy, the filer enters into a multi-year, court-supervised repayment plan, which helps the filer catch up on payments while hanging on to important assets. 

What is interesting about this data is that 2005 is when Congress updated the bankruptcy code to encourage (and in some cases force) more bankruptcy filers to file under Chapter 13 instead of Chapter 7. It is clear from the data that the vast majority of filers still file under Chapter 7. 

Is Wisconsin Following This Trend? 

Taking a look at the Wisconsin data, we can see that is certainly true here. During the 12-month periods ending September 30, 2006-2021, there were around 13,100 Chapter 13 cases filed in the Western District of Wisconsin. That is 14.04% of the total nonbusiness bankruptcy cases filed in that district. In the Eastern District, where Milwaukee is, there were around 61,600 Chapter 13 cases filed. Those were 26.13% of the nonbusiness bankruptcy cases filed in the district. 

But compare this to the Southern District of Georgia where 74% of all nonbusiness bankruptcy cases were filed under Chapter 13. Or the Middle District of Alabama, where 70% of all nonbusiness bankruptcy cases were filed under Chapter 13. Clearly there are regional differences in bankruptcy filing trends that it will be important to keep an eye on.  

Milwaukee Bankruptcy Attorneys You Can Trust

The Hanson & Payne team will continue to monitor bankruptcy trends across the country and in the Milwaukee area to ensure we can serve our clients well. 

We are a full-service bankruptcy law firm you can trust to handle your case with care. Please contact our experienced team of attorneys to schedule a meeting if you are in need of advice about bankruptcy, or representation in a pending case.