Bankruptcy charts of the day

By Felix Salmon
February 15, 2011
official news release on US bankruptcy filings in 2010:

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This chart comes from the official news release on US bankruptcy filings in 2010:


There’s no financial crisis, in this chart, and no sign of any let-up in the rate of increase of bankruptcies. That’s consistent with what the news release says:

Bankruptcy filings in the federal courts rose 8 percent in calendar year 2010, according to data released today by the Administrative Office of the U.S. Courts. Total filings remain at a five-year high.

But look a bit more closely and you see something very odd. Check out the x-axis: there’s a column every three months from December 2006 through December 2009. And then there’s a sudden jump to December 2010: three bars have been left out.

What’s more, the chart starts immediately after the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 took effect. The act caused a huge spike in bankruptcy filings before the Act went into law, and therefore an artificial drop afterwards — as a result, we have no indication of what’s remotely normal when it comes to these figures.

So let’s have a look at the same chart, presented a bit more honestly:

What we have here is the rate of filings not only slowing down but even falling a little in the final period, from 1.595 million filings to 1.593 million. And clearly we seem to be topping out — there’s much less of a sense, here, that there’s no end in sight to the growth in bankruptcy filings.

On top of that, there’s a lot of smoothing going on here due to the use of overlapping 12-month periods. If you look at the raw quarterly data, you get something more like this:

Here, bankruptcy filings peaked at 422,000 in the second quarter of 2010, and have subsequently fallen by more than 12% to 370,000 in the final quarter. Far from rising, as the official chart suggests, the actual number of bankruptcy filings in the fourth quarter of 2010 was lower than it was in the fourth quarter of 2009.

What’s more, in both of my charts it’s clear that the number of filings is more or less “back to normal” after the artificial interruption of BAPCPA. The act was meant to decrease the rate of filings; it doesn’t seem to have worked very well in that regard, although admittedly we’re still painfully emerging from a particularly nasty recession. But in any case adding the historical data does make the official chart much less scary.

None of this is remotely obvious from the press release, which unhelpfully provides the underlying data in an eight-column grid with the numbers running from left to right and bottom to top. If I didn’t know any better, I would say that someone at the press office was trying to make the bankruptcy situation look worse than it actually is. But I have to say I have no idea why they’d do that.

Update: Apologies, my charts somehow disappeared from this post when it was first posted. They should be there now!

Update 2: A quick show of hands, if anybody’s still reading this. My charts here are clever embedded things where you can mouse over the columns and see the actual figures. On the other hand, they don’t seem to show up in RSS feeds. So, should I continue with smart interactive charts, or should I go back to dumb pictures? Any opinions?


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Changing the subject: I am curious about your opinion on the Airgas/Air Products case released today.

Airgas won. I’m clear on that. The court said that this does not mean it is validating “just say no,” but it seems in effect to have … validated “just say no.”

Posted by Christofurio | Report as abusive

I meant to include a link. Here’s the decision: are-Ruling-in-Airgas-Case

Posted by Christofurio | Report as abusive

Uh, the second graphic isn’t shown.

But your general conclusion is spot-on: personal bankruptcies aren’t ramping up, but may not be fading much as the “recovery” continues. (CMBS defaults are another story; remember all those 2005-2008 stories about “new businesses” being started? Guess what…)

If it is a plateau, the “lag factor” (people who resisted filing until they were employed again, and therefore had enough money to do so, as it were) may mean a real recovery is in the offing. Doesn’t seem the way to bet for the general populace (as opposed to GD/NP), but if you’re telling the “recovery has begun” story, this is another data point in its favor.

Whether 2011 is 2003 or 1982 is left as an exercise.

Posted by klhoughton | Report as abusive

The load time on this post was horrible because of the graphics. I got ‘access denied’ fliers several times, and the second graph isn’t showing.

All in all it’s clever but time-consuming and inconvenient, and I can’t even type this easily because the lag on the page is so bad. I suggest a link to an interactive graph and make do with just pictures on the blog.


Posted by REDruin | Report as abusive

As the creator of the chart, please let me say: Sorry! This is what happens when amateurs like me get busy. Instead of asking our statisticians to put together a chart, I took a stab at it and obviously got it wrong. I shall stick to the writing of press releases from now on. And again, my apologies for the skewed chart.

Posted by KarenRedmond | Report as abusive

Your smart charts are self-destructing. I see them at first
but then they get replaced by a string of “access denied”.

Posted by FisherD | Report as abusive

@KarenRedmond Skewed? Irresponsible hatchet job of figures … Why is that? If you have that much time on your hands, perhaps you might have double checked your work or had a colleague check it to tell you what a mess you made of it. PS, your mess is still there… which means you are willfully misrepresenting the data.

@felix, your charts still come in and out, yet display if you stay on the page long enough… and still flash access denied. If the charts are causing the lag, they are certainly not reader friendly.

Posted by hsvkitty | Report as abusive

On the “clever embedded” charts — I think they’re cool; it’s remarkable what Google gives away for free ( However, the value added in conveying information better is not that much, so if they cause trouble for some people they may not be worth it.

Posted by mkenney | Report as abusive

Indeed, it’s still there.

Is it conceivable that the same thing that’s happening with employment is happening with bk’s? The discouraged aren’t even bothering to file for bankruptcy?

Also, this is funny: “…we’re still painfully emerging from a particularly nasty recession. Um, no. You begin to emerge when you’ve entered, say, the fifth inning. We’re still at the top of the first. (Pssst.. and if we’re going to call the last big one a “depression,” we can certainly do that now too. The NBER is just a propaganda tool.).

Posted by Uncle_Billy | Report as abusive

hey felix, i’m pro RSS-visible charts. that is all.

Posted by rmbjspd | Report as abusive

She used your chart and made the corrections. bravo for ensuring the charts were correct, Felix.

Posted by hsvkitty | Report as abusive

I see them at first but then they get replaced by a string of “access denied”.
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Posted by Danail123 | Report as abusive

I see them at first but then they get replaced by a string of “access denied”.

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Posted by Danail123 | Report as abusive

Best of all, this California Guide has a Money Back Guaranty. If you are not satisfied with the California Guide you buy on this website, I will send you a refund- no questions asked.
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Posted by carl.gregory16 | Report as abusive

It is quite scary to see this bankruptcy charts, because it makes you feel your money is unsafe.

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Posted by BostonMarket | Report as abusive

You should consider how a filing may affect your life, how not filing may affect your life and then decide which results are better for you.
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Posted by carl.gregory16 | Report as abusive

Best of all, this California Guide has a Money Back Guaranty. If you are not satisfied with the California Guide you buy on this website, I will send you a refund- no questions asked.
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Posted by aabner58 | Report as abusive

Bankruptcy is a very scary thing to do but it is better to start a clean slate if you financial crisis is to bad, at least creditors will stop calling and it will give you a chance to start over.

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Posted by curtman40 | Report as abusive