Managing Editor
Bankruptcy filings continue to make headlines, for obvious reasons.
Based on the first half of the year, filings in the U.S. Bankruptcy Court Middle District of Florida are on track to top 68,200 petitions for 2010. The figures were updated last week.
That’s 10 percent higher than last year’s full-year total, and it could exceed it by even more.
“I can see the numbers actually being higher than the projections unless something major changes in the economy,” said Jason Burgess, a bankruptcy attorney with Crumley, Wolfe & Burgess and secretary of the Jacksonville Bankruptcy Bar Association.
A struggling economic recovery after a deep recession, continuing unemployment rates topping 10 percent, the inability of jobseekers to find work, continuing foreclosure rates and the hard-hit real estate market are considered key factors in the rise in bankruptcies.
“Bankruptcy appointments in my office are proceeding at the same or higher rate than a year ago. Unemployment has run out for many people. For a family with one worker and one person on unemployment, this drop in income is the difference that will force them into bankruptcy. I believe bankruptcies will not decline until employment starts to increase,” said bankruptcy attorney Edward P. Jackson with Edward P. Jackson, P.A.
Bankruptcy Bar Association Chair Jerrett McConnell wouldn’t be surprised to see the six-month pace exceeded, either.
“We are in what tends to be the slower months for bankruptcy filings,” said McConnell, a bankruptcy attorney with Friedline & McConnell. “It will be interesting to check the numbers after September and October, which are traditionally big months for bankruptcy filings.”
McConnell said it seems that people wait to file bankruptcy after the vacation and back-to-school season.
“I distinctly remember a case where the trustee questioned a bankruptcy filer regarding a $5,000 tax refund she received:
‘What did you do with the tax refund?’
‘I took the family on a Disney Cruise.’
‘You didn’t think about using some or all of that money to pay back your creditors?’
‘Nah. I figured I was going to have to file bankruptcy anyway, so I might as well go out and have a little fun.’
“Needless to say, that debtor had a rough time in bankruptcy court,” said McConnell.
The Middle District of Florida covers 35 of the state’s 67 counties and includes 10 million of the state’s 18 million residents. It covers many of the metropolitan areas in the state, including Jacksonville, Orlando, Daytona, Tampa Bay, Fort Myers and Ocala.
Filings rose 10 percent in the Middle District the first half of 2010 over the first half of 2009.
The Jacksonville Division saw 5,874 filings for the first six months, 7 percent higher than the first half of last year.
For the Middle District, Chapter 7 liquidation’s are up 19 percent, Chapter 13 individual wage-earner reorganizations are up 7.5 percent and Chapter 11 reorganizations are up 43 percent.
Chapter 7 filings, at 25,458, dominate at 75 percent of total filings, followed by Chapter 13 petitions at 24 percent.
Chapter 11 filings totaled 440 for the first six months, but bankruptcy attorneys say they are seeing more companies and higher-income individuals filing this year. The most visible Chapter 11 individual petitioner this year has been former Jacksonville Jaguars quarterback Mark Brunell.
Burgess said the number of bankruptcy filings is returning to pre-2005 levels. Before a change in the U.S. Bankruptcy Code late that year, “the numbers were routinely high.”
Burgess said there were 13,320 filings in Jacksonville in 2003 and 13,019 in 2004, just before the filing boom in 2005, when 15,951 cases were filed in Jacksonville.
“The code change in 2005 made people feel like filing for bankruptcy was impossible, when in reality it was not,” said Burgess.
“The bad economy has shown people that bankruptcy is still a viable option to help good people get out of tough economic situations,” he said.
Bankruptcy filings
Jacksonville Division U.S. Bankruptcy Court Middle District of Florida
Source: U.S. Bankruptcy Court
January-June filings
Middle District of Florida Jacksonville, Orlando, Tampa
Chapter 7 - Liquidation
Chapter 11 - Corporate reorganization
Chapter 12 - Farmer, fisherman reorganization
Chapter 13 - Individual, wage-earner reorganization
Chapter 15 - Insolvency involving more than one country
Source: U.S. Bankruptcy Court
Middle District of Florida Total filings
Source: U.S. Bankruptcy Court
356-2466