Media Continues to Mischaracterize Bankruptcy Statistics
The Chicago Tribune this week announced "Personal Bankruptcy Filings Plunge". Whether through mischaracterization or misunderstanding, mainstream media across the country are reporting on the dramatic drop in bankruptcy filings over a similar period in the previous year: it happened when the fourth quarter 2005 stats were released, and it's happening now, in the wake of the first quarter 2006 stats.
It's certainly true that far fewer personal Chapter 7 cases were filed in the first quarter of 2006 (65,397) than in the first quarter of 2005 (289,239). But in reporting consistently on the dramatic decline, the press persistently ignores the clear trend in filings since the law change.
Breaking down the statistics by month since the law change paints a much more realistic picture:
November, 2005: 5,460 (7); 8,298 (13)
December, 2005: 9,274 (7); 12,362 (13)
January, 2006: 13,033 (7); 14,202 (13)
February, 2006: 19,591 (7); 15,761 (13)
March, 2006: 30,626 (7); 19,351 (13)
In addition to the steady increase in filings each month since the law change, the proportion of Chapter 7 cases is working its way back toward the norm. Although both mainstream media and industry sources like Lundquist Consulting point to the increase in percentage of Chapter 13 filings versus prior years, that ratio is dropping monthly, with Chapter 7 filings far outstripping 13s during March, 2006.
Additionally, the Tribune reports that June personal bankruptcy filings averaged 2,272 per day. Although the paper compared that to the "typical" 5,000-6,000 filings per day before the law change. The more significant comparison, however, seems to be with current numbers: if the reported average is accurate, then June filings--significantly outdistancing March filings--show that the trend back toward pre-BAPCPA numbers continues.
