Second-quarter Colorado bankruptcy filings were 71 percent lower than a year earlier, but rose 84 percent from the first quarter, as filing trends continued to reflect the impact of last year's new bankruptcy law.
Chapter 7 filings surged in the first three quarters of 2005, as individual debtors hurried to court before a new, stricter law went into effect in October 2005. Total filings then dropped precipitously -- from 14,725 in October to 130 in November -- and have been slowly returning to normal levels.
Altogether, 2,632 bankruptcy cases were filed in Colorado in the April-through-June period, according to data on the Web site of the U.S. Bankruptcy Court for the District of Colorado.
Of those, 2,165 filings were for Chapter 7, the liquidation bankruptcy commonly used by individuals who may also be the owners of small businesses.
Only 22 cases involved Chapter 11, the reorganization typically associated with large companies. That is the same number of filings as in the same quarter a year ago, and up from 18 in the first quarter of 2006.
The bankruptcy court said that 121 of the filings during the second quarter were business cases, up from 63 in the first quarter of this year and down from 196 in the second quarter of 2005.
The court doesn't break down its business case statistics by chapter. It counts a bankruptcy as a business filing if a business name was used in the filing, if it was identified as a business case by the debtor or the debtor's lawyer, or if more than half the debt was business-related.
A total of 444 filings were for Chapter 13, which covers individual reorganizations. That was down from 670 in the same period a year earlier, but up from 286 in the prior quarter.
On a four-quarter moving average, Colorado's per-capita bankruptcy filings remain high, the Federal Deposit Insurance Corp. (FDIC) warned in its Summer 2006 Colorado State Profile.
Moreover, consumers face added pressures this year that "contribute to household distress, keeping bankruptcies at elevated levels," the FDIC said. Chief among them are rising interest rates and higher minimum monthly credit card payments. In January, most major card issuers boosted minimum payments to 4 percent of the balance, from 2 percent.
