State Bankruptcy Numbers Drop

Bankruptcy filings in Connecticut have dropped 5 percent for the first half of the year, according to a report issued today by The Warren Group, publisher of The Commercial Record.

Bankruptcies in the state were 4,710 in the first half of 2011. That is down from 4,968 during the same period a year ago, the reports states.

The Boston-based Warren Group is a major compiler of such statistics for the region.

Chapter 7,  the most common option for those seeking relief from their debts,  accounted for nearly 90 percent of bankruptcy filings in Connecticut in the first six months of 2011, the report states.

During the second quarter alone, personal bankruptcy filings in Connecticut dropped more than 4 percent to 2,562, a slight drop from 2,674 filed during the same period in 2010, the Warren Group said.

"The fact that bankruptcies are holding steady, and even slightly decreasing from the same time a year ago is a good sign," said Vincent Valvo, group publisher and editor-in-chief of The Commercial Record. "However, employment numbers have to improve before we can confidently say consumers are paying off debt and fewer are resorting to bankruptcy."

People filing under Chapter 7 bankruptcy can eliminate most debt after non-exempt assets are used to pay off creditors. In contrast, Chapter 13 requires debtors to arrange for a three- or five-year debt-repayment plan.

Year-to-date Chapter 13 filings also decreased. They fell 13 percent to 481, from 551 filings during the same period in 2010. Chapter 13 bankruptcy filings dropped 5.5 percent to 246 in the second quarter, down from 291 during the same period in 2010.

Chapter 11 filings are used for business bankruptcies and allow companies to continue operating during the restructuring proceeds. They dropped compared to the same period a year ago. Filings for the first six months of the year declined 23 percent, dropping to 57 from 74 during the same period in 2010. Second quarter filings dropped 30 percent to 23, down from 33 in the second quarter 2010, the report states.

A total of 5,248 filers statewide sought protection under Chapter 7, Chapter 13 and Chapter 11 of the U.S. bankruptcy code in the first two quarters of the year, down 6 percent from 5,593 during the same period in 2010, according to the Warren Group.