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Federal bankruptcy filings plunged 70% in 2006, the lowest number in 19 years, according to the Administrative Office of the U.S. Courts, which maintains the numbers. They reflect the first full year in which the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 has been in effect. Bankruptcies filed in calendar year 2006 totaled 617,660, down from 2.07 million filed during 2005, according to the court statistics. The annual number for 2006 was less than the total filings in just the first three months of 2005. Three causes may have contributed to the drop, according to Margaret Mann, chair of the restructuring and insolvency practice at Heller, Ehrman in San Diego. There was a rash of filings in 2005 in advance of the new law so the measure is an abnormally high peak. The new law did make it tougher for people to file so anyone not in desperate straights did not file in 2006, she said. Lastly, in 2006 the economy had enormous liquidity, so businesses were able to sell property or find new financing and not have to resort to bankruptcy, Mann said. Although numbers fell significantly in 2006, they showed a slight end-of-year rise with fourth quarter numbers the highest of the four quarters for the year. The majority of bankruptcies involved predominantly non-business debts, falling by 71% for the year. Filings among businesses, a much smaller share of total filings dripped by 50% for the year, to 19,695 in 2006 from a high of 39,201 in 2005.

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