Federal courts report massive jump in bankruptcies

Aug. 15, 2002 — Filings for Chapter 7 bankruptcy protection have broken previous records, with 1.05 million filings in the one-year period that ended March 31, federal courts reported.

Federal courts saw a 17.2 percent increase in bankruptcy filings during this time. Five bankruptcy courts saw Chapter 7 filings increase by at least 29 percent.

Chapter 7 is designed to allow individuals to keep certain exempt property while the remaining property is sold to repay creditors. In addition, total bankruptcy filings exceeded 1.5 million for the first time in any 12-month period.

Iowa-Southern was the district that saw the sharpest one-year percentage spike in Chapter 7 filings. The 6,419 filings there represented a 34.1 percent increase over the 12-month period that ended March 31, 2001.

North Carolina-Middle saw a 32.6 percent increase; Ohio-Northern, 31.3; Utah, 30.2; and North Carolina-Eastern 29.

The largest Chapter 7 caseload for the 12-month period ending March 31 was California-Central, with 72,533 filings.

Illinois-Northern was next with 36,853; then Florida-Middle, 36,280; Ohio-Northern, 31,504; and Ohio-Southern, 27,173.

Publicly traded U.S. corporations also have set a bankruptcy record, with $267.6 billion in assets reported in bankruptcy so far this year, according to bankruptcydata.com. Business bankruptcies were up 5.6 percent over the previous year with 39,201 filings.
Until Worldcom, Inc., declared bankruptcy on July 21, Enron Corp.’s Dec. 2, 2001 filing had been the largest bankruptcy since 1980 with reported pre-bankruptcy assets of $63.4 billion.

Enron ranks #2 in a list of the largest bankruptcies since 1980. Also in this list is Pacific Gas & Electric Co., the California utility which filed for bankruptcy protection on April 6, 2001 with a reported $21.5 billion in assets. A chart of the top 20 filings is available on bankruptcydata.com.

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