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Bankruptcies surge in 2008, passing 1 million mark again

By CreditCards.com staff

Editor's note: See the most recent bankruptcy statistic story.

Personal bankruptcies surged to more than 1 million filings in the United States in 2008 -- the most since a rewrite of bankruptcy laws took effect in 2005.

State-by-state data on bankruptcies 2005-2008

Filings of Chapter 7 and Chapter 13 bankruptcies rose 33 percent in 2008 as the economy worsened, according to data from U.S. bankruptcy courts and compiled by the bankruptcy data firm Aacer. Chapter 13 bankruptcy allows people to pay off debts under a three- to five-year plan; Chapter 7 bankruptcy allows for a discharge of all debt.

In 2007, there were 819,115 such filings in the 50 states and Washington, D.C. The number rose to 1,086,130 in 2008 as the recession took hold. That's nowhere near the record of 2.1 million filings in 2005, as consumers rushed to file before a federal bankruptcy reform law went into effect and made filings more difficult and expensive, but it's still a significant leap.

The pain of bankruptcy was spread unevenly, but it was everywhere. Not one jurisdiction showed a decrease in filings, whether measured on a per capita basis or by the raw numbers of filings.

Texas came closest -- there were only about 1,500 more Chapter 7 and Chapter 13 filings in 2008 than the year before.

At the other end of the scale were five states where the bad economy plus housing woes hit particularly hard. The greatest increases in per capita bankruptcy filings were found in Nevada (7.15 filings per 1,000 residents), Delaware (4.02), California (3.57), Florida (3.63) and Rhode Island (3.99).

For the second straight year, Tennessee had the distinction of having the overall highest per capita rate of filings, with 7.65 filings per 1,000 residents. Alaska retained its title as the land of the fewest personal bankruptcies -- only 877 were filed all year. That works out to a rate of 1.28 per 1,000.

Chapter 11 bankruptcies, under which businesses file for court-supervised reorganization or liquidation, also soared. A total of 10,084 companies filed Chapter 11 in 2008. That represents an increase of 62 percent, and is more than double the number of such filings in 2006.

Below is the per capita bankruptcy filing rates for every state and the District of Columbia. For more bankruptcy details, see interactive map showing bankruptcy data state by state, 2005-2009.

State2008 rank2007 rank
Tennessee 1 1
Nevada 2 7
Georgia 3 2
Alabama 4 3
Indiana 5 4
Michigan 6 5
Ohio 7 6
Kentucky 8 9
Arkansas 9 8
Colorado 10 12
Illinois 11 14
Missouri 12 11
Mississippi 13 10
Delaware 14 30
Rhode Island 15 18
Wisconsin 16 17
Virginia 17 20
Nebraska 18 15
Florida 19 31
California 20 37
Louisiana 21 13
Utah 22 21
Idaho 23 19
Oregon 24 23
Washington 25 25
Minnesota 26 29
Kansas 27 16
Maryland 28 26
Arizona 29 40
New Jersey 30 33
Oklahoma 31 22
New Hampshire 32 32
West Virginia 33 24
Iowa 34 28
Pennsylvania 35 27
Massachusetts 36 35
North Carolina 37 34
New York 38 36
Connecticut 39 45
New Mexico 40 41
Maine 41 42
North Dakota 42 38
Vermont 43 48
South Carolina 44 44
Montana 45 46
Texas 46 39
South Dakota 47 43
Hawaii 48 50
Wyoming 49 47
District of Columbia 50 49
Alaska 51 51

See related: Bankruptcy data state by state

Published: January 23, 2009



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