Consumers and businesses are filing for bankruptcy at the slowest pace since 2008 in Jacksonville and in the Middle District of Florida.
Filings peaked in 2010 and have been dropping since.
Filings in the 16-county Jacksonville Division peaked at an average of 953 a month in 2010 and have fallen to 721, based on January-September statistics.
That's an average of 232 fewer filings a month.
"These numbers are not surprising," said Jacksonville Bankruptcy Bar Association Chairman Mark Mitchell. "They reflect the current status or trend of our economic recovery."
Mitchell, a shareholder with the Rogers Towers firm, said unemployment rates have fallen below 10 percent.
Reports show that the rate is below 10 percent in the county, metropolitan area, state and nation.
If filings remain at the pace of the first nine months, bankruptcy filings could end 2012 in Jacksonville at 8,657, the lowest since 2008 and 24 percent below the record nine-month total of 11,439 in 2010.
Districtwide, the nine-month filings of 35,523 are the lowest since 2008 and 31 percent below the record 51,232 in 2010.
If filings remain at the current rate, the district could end the year with 47,364 filings – again, the lowest since 2008 and 29 percent below the record of 66,618 in 2010.
Lawyer Ed Jackson, a director of the association, said unemployment has fallen and Florida house values have increased slightly, citing a Zillow.com report that values rose from average of $123,000 in August 2011 to $126,000 in August this year. Zillow.com is an online real estate marketplace.
"Although the economy is recovering slowly, it appears to be recovering. The bankruptcy statistics are a reflection of the recovering economy," said Jackson, of the Edward P. Jackson, P.A., practice.
Dawn Lockhart, president and CEO of Family Foundations of Northeast Florida, said fewer bankruptcies are a positive sign.
"Declining bankruptcy levels means that more people and businesses are coming out of our economic problems," Lockhart said.
"However, every bankruptcy means that a family or a business is in a financial crisis. At Family Foundations, we know that bankruptcy is never an easy choice. Financial problems are one of the leading causes of stress," she said.
Family Foundations is a nonprofit that provides credit counseling and other services to consumers.
All chapter filings are down
Bankruptcies soared to record levels in 2010 as the national, state and local economies struggled through what has been called the deepest recession since the Great Depression.
The U.S. recession began in December 2007 and emerged more than three years ago, in June 2009, although Florida's downturn is widely viewed to have lasted until at least early 2010.
Florida's economic dependence on housing and tourism, both hit hard by the recession, led to ongoing sluggishness around the state.
As the Daily Record has reported, U.S. Bankruptcy Judge Paul Glenn in the Middle District Jacksonville Division said last year that as the recession began in late 2007, the court saw filings by real-estate petitioners, such as construction companies, subcontractors, developers and related entities.
Then small businesses began filing, followed by more individuals who were invested in real estate and could no longer carry the debt because they couldn't sell the properties or make enough rental income from them.
Records show economy hotels then began filing, as well as restaurants and other businesses.
"From the standpoint of jobs, it makes sense that bankruptcy filings are down compared to the years immediately following the financial crisis. But there are additional factors in play," Mitchell said.
Mitchell said residential and commercial real estate markets continue to struggle as a whole.
"In my opinion, this is perhaps the most significant impediment to a faster and more robust recovery. Unfortunately, this is going to take time," he said.
"There remains a backlog of foreclosures, particularly foreclosure actions that have been filed but not yet complete," he said.
The Middle District of Florida encompasses 35 of the state's 67 counties and covers the major metropolitan areas of Jacksonville, Orlando, Daytona, Tampa and Fort Myers.
The Jacksonville Division covers the 16 North Florida counties of Baker, Bradford, Citrus, Clay, Columbia, Duval, Flagler, Hamilton, Marion, Nassau, Putnam, St. Johns, Sumter, Suwannee, Union and Volusia.
Three-quarters of the way into the year, the number of district bankruptcy filings has fallen almost 15 percent from last year and fell almost 31 percent from 2010.
In the Jacksonville Division, filings are almost 12 percent below last year and down almost 27 percent from 2010.
Among the Middle District filings for the first nine months of the year compared with the record in 2010:
• Chapter 7 liquidations were down 32 percent, while accounting for about 73 percent of all filings, a lower proportion than the almost 75 percent in 2010. Businesses and individuals use Chapter 7.
• Chapter 11 reorganizations fell about 35 percent this year from 2010. While dominated by businesses, high-wealth individuals also seek protection under the chapter.
• Chapter 13 wage-earner repayment plan filings were down 25 percent and accounted for 26 percent of all filings, a higher proportion than 24 percent in 2010.
Recession recovery or just a pause?
Lawyers expect the pace of bankruptcy fillings to remain high, but not at a record rate.
"While things are improving, albeit more slowly than many would like, we are still in a state of recovery, and I suspect that bankruptcy filings will continue at an above-average pace for the near future, though not at the levels of 2009 and 2010," said Mitchell.
Ellsworth Summers, president of the bankruptcy bar association, expects the pace to pick up during the current fourth quarter of the year or the first quarter of 2013.
Summers said an increase in residential foreclosure filings in the third quarter could lead to an increase in bankruptcy filings.
"As we know, the bankruptcy filings are tied directly to the foreclosure filings, and if the foreclosure filings are up in the third quarter, then there will be a subsequent bump in bankruptcy filings within a few months," he said.
Summers, a shareholder at Rogers Towers, said the filing of foreclosure lawsuits slowed the past six months for two reasons — issues with the "robosigning" by lenders and the delay in the opening of the Duval County Courthouse.
The old courthouse closed May 18 and the new courthouse was scheduled to open May 29 but was delayed to June 18, which affected the filing of lawsuits.
Also, Summers said the five-year loans made in 2007, as the recession was beginning, are coming due, as are loan modifications made in 2009-11.
"If these loans go into default, there will be a whole new batch of defaulted loans that will require lenders to take legal action," Summers said.
"I would anticipate that increased foreclosure lawsuits will result in an increased number of bankruptcy cases filed," he said.
St. Augustine-based bankruptcy lawyer Nina LaFleur said fewer bankruptcy filings, nationwide as well as locally, might seem to signal an economic recovery.
"On the surface, it may seem that the lack of bankruptcy filings would be a signal of economic recovery, but some say those numbers actually signal the economy is worsening," she said.
"In Florida, we still have an artificial slowdown of the foreclosure process, which was rampant with defective foreclosure suits and shoddy work done by foreclosure law firms resulting in a decrease of resulting bankruptcy filings," said LaFleur, a director of the association.
"There are still thousands of foreclosures yet to be filed so we will see those bankruptcy filings eventually," she said.
LaFleur, who operates the LaFleur Law Firm, said the firm has many clients who haven't made mortgage payments in two to three years and a foreclosure hasn't been filed yet.
"As the foreclosure filings pick up speed, so will the bankruptcy filings," she said.
LaFleur cited other factors, including the possibility of federal spending cuts that could affect the judicial system and federal courts, "so we may face many challenges in the coming year."
Lockhart at Family Foundations said she often sees families turn to bankruptcy to try to save their home from foreclosure.
"Family Foundations is very concerned that the third quarter saw a 44 percent increase in residential foreclosures. We know that this will result in families needing help and we encourage people to seek help from certified financial counselors," she said.
District still ranks No. 3-5 nationwide
The Middle District of Florida continues to rank in the top five districts nationwide for bankruptcy filings.
Central California, which is the Los Angeles area, tops in Chapter 7, 11 and 13.
For the 12 months ending in June, the Middle District came in No. 5 in Chapter 13 filings, bumped from its former No. 4 spot by Western Tennessee.
Nationwide, U.S. Bankruptcy Court statistics for the 12 months that ended June 30 show there were more than 1.3 million total filings, down 14 percent from more than 1.5 million the year before.
Chapter 7 liquidations comprised about 70 percent of the total filings each year.
Among the national filings:
Total filings: Central California was No. 1 with 119,634 filings; Northern Illinois was No. 2 at 57,526; the Middle District of Florida was No. 3 with 49,418.
Chapter 7: Central California was No. 1 with 90,059 filings; Northern Illinois was No. 2 at 41,274; the Middle District of Florida was No. 3 with 36,093 filings.
Chapter 11: No. 1, Central California, 1,049; No. 2, Southern New York, 752; No. 3, Delaware, 557; No. 4, Middle District of Florida, 553.
Chapter 13: No. 1, Central California, 28,513; No. 2, Northern Georgia, 21,268; No. 3, Northern Illinois, 15,925; No. 4, Western Tennessee, 12,966; No. 5, Middle District of Florida, 12,752.
Consumer help available
Lockhart at Family Foundations said in a previous interview her organization has work to do with consumers, considering that statistics show half of all adults do not have a budget and a third say they are not paying their bills on time.
She said Family Foundations provides pre-filing counseling to people seeking bankruptcy protection.
Lockhart said the counseling focuses on helping individuals understand the options available outside of bankruptcy.
She said the organization also provides pre-discharge bankruptcy education "so that individuals can immediately start to re-build their credit" once they emerge from a bankruptcy.
"Everyone can be more wise about money. Financial education is one of the best tools available for individuals, families and businesses to face their financial future with more understanding and confidence," she said.
@MathisKb
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January-September bankruptcy filings
Jacksonville Division, U.S. Bankruptcy Court, Middle District of Florida
| Year | Nine-month filings | Annual | Monthly average |
| 2012 | 6,493 | 8,657 (pace) | 721 (9-month) |
| 2011 | 7,351 | 9,521 | 793 |
| 2010 | 8,881 | 11,439 | 953 |
| 2009 | 8,429 | 11,144 | 929 |
| 2008 | 6,098 | 8,412 | 701 |
Source: U.S. Bankruptcy Court
January-September bankruptcy filings
Middle District of Florida
| Chapter | 2008 | 2009 | 2010 | 2011 | 2012 |
| Chapter 7 | 20,561 | 33,918 | 38,259 | 31,255 | 25,917 |
| Chapter 11 | 365 | 484 | 604 | 458 | 393 |
| Chapter 12 | 1 | 25 | 26 | 14 | 12 |
| Chapter 13 | 9,826 | 11,681 | 12,337 | 9,848 | 9,201 |
| Chapter 15 | 1 | 1 | 6 | 1 | 0 |
| Nine-month total | 30,754 | 46,109 | 51,232 | 41,576 | 35,523 |
| Calendar-year total | 42,557 | 61,690 | 66,618 | 53,554 | 47,364 (pace) |
Chapter 7 – Liquidation
Chapter 11 – Corporate or high-wealth individual 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