Personal Bankruptcies Plummeted in Third Quarter, 1999

A combination of tighter lending standards and the most favorable economic conditions of the century have finally curtailed the alarming spiral in personal bankruptcies.   Since 1994 nearly 6 million U.S. households have filed for personal bankruptcy relief.   However, in early 1999 bankruptcy filings began to decline, slowly at first, but accelerating as the year progressed.   The Administrative Office of the U.S. Courts reported that filings for the third quarter, 1999 were 10.4 percent lower than during the same period in 1998, the largest quarterly drop in the filing rate in the last decade.   For the 12 months ending September 30, 1999, personal bankruptcies dropped by 5.3%.   Given that the decline in filings was accelerating through the year it now appears likely that when the final data for 1999 have been tallied bankruptcies will have fallen by 8 – 10%, relative to 1998.   Lest this welcomed decline seem to dampen the need for legislative reform, keep in mind that the current rate of approximately 1.3 million filings per year is still 50% higher than it was just five years ago (See Table 1). 

Table 2 displays a breakdown of petitions by state and judicial district for the year ending September 30, 1999.  Most districts experienced declining volumes relative to the previous year.  Of the 94 judicial districts that make up the bankruptcy system for the U.S. and its territories, only 18 experienced any growth in filings, the smallest number since 1993.  

Table 1

Personal Bankruptcies, 1994 – 1999

^*estimate based on filings through September 30, 1999

Table 2:  Breakdown by judicial district 

Table 3

Personal Bankruptcy Leaders

by Volume, Growth, and Number Filed Under Chapter 13

(12 months ending September 30, 1999)