updated 1/11/2006 7:03:20 AM ET 2006-01-11T12:03:20

The rush of indebted consumers to file bankruptcy before a tough new law took effect pushed personal filings for 2005 to their highest annual level on record — more than 2 million, according to new data.

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Significant increases in consumer bankruptcy filings occurred in every region, according to the data released Wednesday by Lundquist Consulting Inc., a financial research firm based in Burlingame, Calif. It tallied 2,043,535 new filings last year, up 31.6 percent from 1,552,967 in 2004 — meaning that one in every 53 households filed bankruptcy petitions, according to the company.

The new law, bringing the most sweeping overhaul of the U.S. Bankruptcy Code in a generation and making it harder to erase debts in bankruptcy, took effect on Oct. 17. In anticipation, personal bankruptcy filings jumped in September to the highest on record. They averaged more than 9,000 a day, up roughly 50 percent from 2004's average daily volume, during the first two weeks of September.

By contrast, Lundquist analysts noted a sharp drop in the number of filings since the Oct. 17 deadline. Within the smaller number overall, a greater proportion were made under Chapter 13 versus Chapter 7 of the code. Nearly 60 percent of filings made after Oct. 17 came under Chapter 13, compared with the usual 30 percent under the old regime, Lundquist said.

The new law bars those with above-average income from Chapter 7 — where debts can be wiped out entirely — except under special circumstances. Those deemed by a new "means test" to have at least $100 a month left over after paying certain debts and expenses now have to file instead a 5-year repayment plan under the more restrictive Chapter 13.

In November, for example, Chapter 7 bankruptcy filings plunged to 17,286 from 81,952 in November 2004, according to Lundquist. Chapter 13 filings were 9,201, compared with 34,865 a year earlier.

Total filings from Oct. 18 through Dec. 31 were around 38,000, representing fewer than 2 percent of all filings for the year, the firm said.

Filings in Ohio jumped 51.7 percent in 2005 to 135,142, making it the second-highest state in volume, the data showed. California was the highest, with 164,856, a 35.9 percent increase.

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