Bankruptcy Filings for 2017 ‘Flattened Out’ But Expected to Rise

Bloomberg Law’s® Bankruptcy Law News publishes case summaries of the most recent important bankruptcy law decisions, tracks major commercial bankruptcies, and reports on developments in bankruptcy...

By Diane Davis

Bankruptcy filings fell 0.7 percent in the 12-month period ending Dec. 31, 2017 compared to 2016, the latest figures from the Administrative Office of the U.S. Courts said Jan. 24.

Annual bankruptcy filings in 2017 totaled 789,020, compared with 794,960 in the previous year, the AOUSC said.

The percentage decline is the smallest for a 12-month period since bankruptcy filings reached a peak in 2010,but it is also the lowest number of bankruptcy filings for any calendar year since 2006, according to the AOUSC.

The statistics are “about what he expected,” and show that “bankruptcies have flattened out after years of decline,” Prof. Robert Lawless, of the University of Illinois College of Law, Champaign, Ill., told Bloomberg Law Jan. 24.

Lawless, the reporter for the American Bankruptcy Institute’s commission to modernize the consumer bankruptcy system, predicts that the bankruptcy filings will go back up over time, but not dramatically. The ABI commission expects to publish their final report in December.

“We’re seeing the effect of consumer borrowing two-to-three years ago,” and borrowing will be “going back up,” he said.

We went through a period where “borrowers were paying down their debt,” Lawless said.

“Household debt” is the driver of bankruptcy filings, Lawless said. The more debt consumers have, the more bankruptcy filings there are, he said.

Business v. Non-Business Filings

The majority of bankruptcy filings involve non-business debts. During the 12-month period ending Dec. 31, 2017, non-business bankruptcy filings totaled 765,863, down from 770,846 in the previous year, the AOUSC said.

Business bankruptcy filings during the same 12-month period fell to 23,157, from 24,114 in 2016.

Breakdown of Filings by Chapter

The number of bankruptcies filed by Bankruptcy Code chapter for the 12-month period ending Dec. 31, 2017, are as follows:

  •  Chapter 7 filings totaled 486,347, down from 490,365 in 2016.
  •  Chapter 11 filings totaled 7,442, up from 7,292 in 2016.
  •  Chapter 12 filings totaled 501, up from 461 in 2016.
  •  Chapter 13 filings totaled 294,637, down from 296,655 in 2016.
In Chapter 7, a debtor’s nonexempt assets are liquidated by a trustee and the proceeds are distributed to creditors.

Chapter 13 allows individuals receiving regular income to obtain debt relief while retaining their property, but to do so, they must propose a plan that uses future income to repay all or a portion of their debts over a three- to five-year period.

Chapter 11 protects companies or individuals from creditors while they seek to reorganize their debt or liquidate under a plan that must be approved by the bankruptcy court.

Chapter 12 is designed to protect family farmers and family fishermen.

To contact the reporter on this story: Diane Davis in Washington at

To contact the editor responsible for this story: Jay Horowitz at

Copyright © 2018 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Bankruptcy Law News on Bloomberg Law