The November total of consumer bankruptcy filings under Chapter 7 and Chapter 13 were down 13.3 percent over the total for October, according to the American Bankruptcy Institute (ABI), a multi-disciplinary, nonpartisan organization focusing on insolvency issues. Still, consumer bankruptcy filings are up 2.2 percent over November 2009.

According to the ABI and data from the National Bankruptcy Research Center, the ABI says that 80,670 Americans filed for Chapter 7 bankruptcy in November, while 33,917 filed for Chapter 13. That adds up to a total of 114,587 consumer bankruptcy filings nationwide, down significantly from the 132,173 filings in October. In November 2009, 112,152 people filed for consumer bankruptcy.

Chapter 7 bankruptcy wipes away most types of debt by liquidating the debtor’s assets, unless those assets are exempt. Most Chapter 7 filers don’t lose much or any property, but Chapter 7 is limited to debtors who meet certain criteria, such as having passed a means test and taken credit counseling.

Under Chapter 13, the bankruptcy court sets up a repayment plan based on the debtor’s ability to pay. Over the course of the three- to five-year plan, most or all of the debts are repaid, and any debt left over after the successful completion of the plan is discharged.

The new bankruptcy law passed in 2005 was intended to make it harder for people who could afford to pay some of their debts to file for Chapter 7. Over time, proponents of the law argued, a greater percentage of people would file for Chapter 13 than had done so historically. However, since 2005, the percentage of debtors filing for Chapter 7 bankruptcy protection has continued to increase.

The new numbers from the ABI indicate a continuation of that bankruptcy trend. In November, people filing for Chapter 13 made up 29.6 percent of all consumer bankruptcy filings, which is a slight drop from the October percentage.

“The drop in consumer filings from October is perhaps a positive step that the deleveraging of the U.S. consumer may be underway, after years of expanding consumer debt,” Samuel J. Gerdano, executive director of the ABI, said in a press release.

“Still, we anticipate that there will be nearly 1.6 million consumer bankruptcy filings by year end.”

Source: Press release, American Bankruptcy Institute, “November Consumer Bankruptcy Filings Drop 13 Percent From October,” December 1, 2010