After declining for eight consecutive years, total bankruptcy filings in the U.S. saw a rise of 0.28 percent in 2019, and Alabama recorded the highest rate in the country.
The average nationwide per capita bankruptcy filing rate for 2019 increased to 2.44 (total filings per 1,000 population) from the 2.43 rate during calendar year 2018, according to a Jan. 6 release by the American Bankruptcy Institute.
Alabama experienced more than double the national average, with a per capita bankruptcy rate of 5.62 percent, the highest in the nation, followed by Tennessee (5.29), Georgia (4.38), Mississippi (4.19) and Illinois (3.71).
Nationwide, the commercial chapter 11 filing total of 5,502 during calendar year 2019 represented a 0.36 percent increase from the 5,482 commercial chapter 11 filings in 2018.
Total filings edged up to 757,497 in 2019 from 755,353 filings during calendar year 2018. Total consumer filings also increased to 718,553 nationwide for calendar year 2019 (Jan. 1-Dec. 31), 0.17 percent more than the 717,321 total filings during 2018.
“Two developments in the coming year will improve access to the fresh start of bankruptcy for both struggling small businesses and households,” said ABI Executive Director Amy Quackenboss. “The Small Business Reorganization Act becomes effective next month to provide a better path for Main Street debtors to restructure their debts. Also, the courts, Congress and other stakeholders continue to consider the recommendations of ABI’s Commission on Consumer Bankruptcy to modernize the Bankruptcy Code for consumers wrestling with overwhelming debt loads.”
The “Small Business Reorganization Act of 2019” (SBRA; P.L. 116-54), signed into law on Aug. 23, 2019, by President Donald Trump, becomes effective February 19, 2020. SBRA adds a new subchapter V to chapter 11, providing a better path for small businesses to successfully restructure, reduce liquidations, save jobs and increase recoveries to creditors.