After passage of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 and the rush to file before the law was changed, many attorneys believed filings would dwindle. Well, the mortgage crisis and the bad economy changed all that. The following is a comparison of bankruptcy filings under Chapter 7, Chapter 13 and Chapter 11 for the United States Bankruptcy Court for the Northern District of California.
In 2007 there were a total of 127,359 cases filed in the Northern District of California. Every month and every quarter of the year submissions increase month after month. 2007 really was the start of an increase in submissions. The 2nd quarter of 2007 saw a 16% increase in bankruptcy filings, the 3rd quarter of 2007 increased 7% more and the 4th quarter of 2007 increased another 14% for a total of 21,758 filings for the last three months of 2007. 2008 realized an even greater increase in the cases filed. The first three months increased 18% from the last three months of 2007, the second three months of 2008 increased 26%, the third three months of 2008 increased 14% and the fourth three months increased by 3% for a total of 38,011 applications for the final three months of 2008.
Increase in Filings For the United States Bankruptcy Court for the Northern District of California from 2007 – 2008
Quarter———Year——Cases Filed—-Quarterly———Year—–Cases Filed——-2007 – 2008 Rising
Quarter 1…… 2007………15,041……….Quarter 1……..2008……..25,727. ……………71% more than 2007
2nd quarter……2007………17,505……….2nd quarter……..2008…… ..32,387. ……………85% more than 2007
3rd Quarter……..2007………18,778……….3rd Quarter……..2008…. ….37,083 …………….97% more than in 2007
4th Quarter……..2007………21,758……….4th Quarter……..2008…. ….38,011 …………….75% more than in 2007
Increase in Bankruptcy Filing for the Entire 9th Circuit from 2007 – 2008
Quarter——–Year—–Cases Filed—-Quarter———Year—–Cases Filed——–2007 – 2008 Increase
Quarter 1…….2007…….26,960………..Quarter 1……..2008…….42,165.. …………….56% more than in 2007
2nd Quarter……2007…….31,124…………2nd Quarter…….2008……. 52,874… ……………69% more than 2007
3rd Quarter…….2007…….32,808…………3rd Quarter…….2008…… .60,026………………82% more than in 2007
4th Quarter…….2007…….36,467…………4th Quarter…….2008…… .61,395………………68% more than in 2007
As shown above, bankruptcy filings increased by about 70% from 2007 to 2008. Foreclosure amounts and interest only adjustments or negative amortization mortgages contributed significantly to the increase in bankruptcy cases. Layoffs and general economic downturn also contributed. Approaching 2009 the number of submissions continued to increase by a larger percentage.