BURLINGAME, Calif., Jan. 11 – LAWFUEL – The Law News Network — Lundquist Consulting, Inc., industry leader in bankruptcy statistics and analytics, releases findings that 2005 consumer bankruptcy filings numbered over 2 million, up 31.6 percent from 2004, representing the highest number of filings on record. The dramatic
surge in filings coincided with the Bankruptcy Abuse Prevention and Consumer
Protection Act of 2005 (S. 256), which was enacted on October 17, 2005.
Consumer bankruptcy filings for 2005 were 2,043,535, up from 1,552,967 in
2004. On an annualized basis, 1 in every 53 households filed bankruptcy.
(Household numbers are based on 2005 estimates by the US Census.) Chapter 7
consumer filings, providing consumers with the greatest relief of their debts,
increased 47.2 percent in 2005. Chapter 13 consumer filings, requiring
consumers to repay a part of their debts, declined 7.9 percent.
Chris Lundquist, Founder of Lundquist Consulting, Inc., has over 15 years
of experience in the bankruptcy industry, publishing high quality statistics
and performing qualitative and quantitative studies on the subject. Lundquist
Consulting statistics are quoted in research papers and media articles as well
as used by government entities for policy planning and legislative support
papers. Regarding the increase in 2005 filings, Mr. Lundquist stated, “The
number of consumers seeking relief of their debts through bankruptcy was at an
all time high in 2005, however, since the new law went into effect on October
17, relatively few consumers have used the new bankruptcy system. We are now
seeing bankruptcy levels slowly on the rise as the industry learns the new
The total number of filings since the enactment of the legislation, on
October 17, through December 31 was just over 38,000, representing fewer than
2.0 percent of all 2005 filings. Low filing numbers since the law’s enactment
can be correlated to the fact that many consumers filed earlier than they
might have otherwise to take advantage of the old bankruptcy law. Since the
enactment, the proportion of consumers filing Chapter 13 as compared to
Chapter 7 has increased. Nearly 60 percent of all filings since October 17th
have been filed as Chapter 13, as compared to about 30 percent historically
under the old law. The new law requires consumers to be subjected to a “means
test,” requiring them to file Chapter 13 unless they meet certain debt and
Growth in Consumer Bankruptcy Filings by Region (in percent)
Region 2005 2004
South (West) 26.8 -0.1
South (East) 17.6 -6.8
Pacific 34.3 -10.6
Northeast 36.8 -0.8
North Central (West) 42.4 -2.8
North Central (East) 43.2 -1.7
Mountain 32.3 -0.6
All regions showed a significant increase in growth of filings for 2005.
The South (East) showed the smallest growth in filings at 17.6 percent,
whereas the greatest increase was seen in the North Central (East) at 43.2
percent. The rise in filings in North Central (East) was driven by Ohio,
which increased 51.7 percent in 2005 and was ranked the second highest state
in filing volume at 135,142. The largest number of filings was found in
California at 164,856, a growth of 35.9 percent from 2004. The lowest filing
growth was seen in South Carolina at 1.2 percent. For Regional definitions,
please visit our site at http://www.nbkrc.com/regionaldef.html.
Bankruptcy trends, statistics and analytics are updated weekly and
available through the National Bankruptcy Research Center (NBKRC), a product
offered by Lundquist Consulting, Inc. to clients on a subscription basis.
About the National Bankruptcy Research Center
The National Bankruptcy Research Center (NBKRC) is the resource for
bankruptcy research, financial planning and economic evaluation. The data and
analytics found at the NBKRC provide subscribers with the most accurate,
comprehensive and timely bankruptcy statistics anywhere in the industry.
Subscribers can obtain information online at http://www.NBKRC.com or through weekly
updates sent directly to them. Subscribers include investment banking firms,
securities exchanges, government entities, mortgage brokerages, analysts,
banks, members of the media and online providers of economic and financial
About Lundquist Consulting, Inc.
Lundquist Consulting, Inc., founded in 1989, specializes in information
engineering. The firm brings over fifteen years of expertise in customized
data processing solutions, consulting services and research and analytics with
a strong emphasis in bankruptcy systems and statistics. LCI has been working
in the financial services and technology industries since it’s inception.
Over that time our principals have served on several industry steering and ad
hoc committees in the areas of financial counseling, risk management, and
technology. LCI has performed operational studies and worked with industry
executives and government entities on developing new strategies for process
improvement, risk management policy, and position papers in support of pending