December Filings Bring No Surprises
01/10/2023 08:00 AM Posted by: AIS
As anticipated, if not outright predicted, December 2022 filings exceeded last year’s December filings by nearly six percent. That was the fifth consecutive month of an increase over the previous year.
With the traditional end-of-year slowdown in bankruptcies, December filings were five percent lower than the previous month. We can expect that same slowdown to continue in January until the holiday credit card bills come due, along with post-New Year’s Day foreclosures and repossessions.
If traditional patterns hold, then January filings will show a similar uptick from the previous January, and we may begin to see a healthy climb in filings as 2023 rolls from winter into spring.
Chapter-by-chapter trends contained no surprises either. The number of chapter 13s climbed by a hefty 26 percent over December 2021; chapter 7s decreased by a modest six percent; chapter 11s were pretty even with a one percent rise; and subchapter V small business cases were up by a healthy 13 percent.
We will cover these trends and more during our 2023 Bankruptcy Outlook Webinar on January 25th.
Full-year filing numbers are misleading because trends changed mid-year. For the entire calendar year 2022, total bankruptcy filings fell by 5.8%, down to 378,297. Of that total, chapter 13s increased by an extraordinary 34.1%; chapter 7 decreased by 20%, and chapter 11s registered a 4.01% uptick.
Of greater significance, overall filings increased by nearly five percent over the past six months compared to the last half of 2021. In the third quarter of 2022 (July to September), the number of filings increased by 4 percent over the same quarter during the previous year. Quarter 4 filings rose by 5 percent.
Pandemic-era filing trends came as a surprise to most bankruptcy mavens. That has made many experts slow to predict future trends. In a departure from that prevailing caution, here is some speculation on what to expect during the coming year:
If these predictions bear out, remember you heard it here first. On the other hand, if they do not, then all of us will be happy because it will mean that consumers and businesses did better than we expected.
Happy New Year to us all!
Commentary provided by Clifford J. White, Managing Director – Bankruptcy Compliance for AIS.
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