A year after the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 became law, government statistics show that the number of bankruptcy filings nationwide dropped nearly 70 percent last year.The total number of filings last year dropped to 618,000, down from a record of 2.1 million in 2005, when people were rushing to file before the new laws were enacted, according to statistics from the Administrative Office of the U.S. Courts. The American Bankruptcy Institute said that the 2006 number was the lowest level since 1988.
Total bankruptcy filings were highest in the fourth quarter of 2006, according to the court statistics. Business filings dropped 50 percent to about 20,000, while personal filings dropped 71 percent, to about 598,000.
With the act’s reforms in place, consumers have shifted from filing under Chapter 7 of the U.S. Bankruptcy Code, which allows them to get rid of some debt, toward Chapter 13, which allows them to pay some of their future earnings to creditors.
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