ABI: August Chapter II Reorganizations Drop 41%
According to the American Bankruptcy Institute, more American consumers and businesses have avoided making a trip to bankruptcy court in 2014.
Total U.S. bankruptcy filings through August have declined roughly 13% this year over the same eight months in 2013, according to John Hartgen, spokesman for institute that is dedicated to research and education on insolvency. August saw the steepest monthly drop in new cases, falling 16% over August of last year.
According to the institute, total consumer filings in August dropped 15% to 72,467 from the same month a year ago. Total Chapter 11 reorganizations were down a whopping 41% to 357 new filings from the 604 new cases in August 2013.
In Delaware, the preferred district in the country for big business reorganizations in Chapter 11, the total number of filings for August plummeted to 197, a 36% decrease from the same month last year, Hartgen said. From January through August, overall 2014 insolvencies in the state are down 9% from the same period in 2013, according to institute data.
The institute expects total nationwide filings in 2014, which includes Chapter 7 liquidations and Chapter 11 reorganizations, to fall below one million for the first time since 2007 and the economic downturn.
Hartgen attributed the fall off to sustained low interest rates, a decline in credit card delinquencies and a dip in home foreclosures.
“Consumers and businesses are finding ways to shore up their balance sheets,” Hartgen said.