Bankruptcy filings continue to decline in the Middle District of Florida and the Jacksonville Division, ending the first half of 2013 at the slowest pace since 2008.
Filings peaked in 2010 as the nation began to slowly emerge from the national recession that began in December 2007 and ended in June 2009.
"Bankruptcies are declining as the economy improves. Those hurt most by the recession have already filed bankruptcy," said attorney Ed Jackson, of Edward P. Jackson P.A. and a board director of the Jacksonville Bankruptcy Bar Association.
While the recession technically ended, the recovery has been considered slow. Florida was especially hard-hit because of its reliance on real estate and tourism, both seriously affected by economic downturns.
"Everyone believed the economy would recover, but most people did not believe it would take this long," Jackson said.
Filings down sharply from 2010 peak
During the first six months of the year, 4,152 filings were made in the 16-county Jacksonville Division, down 6 percent from 4,419 in the first half of 2012.
It was the lowest number since 3,862 filings in 2008.
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.
Division filings were down more than 29 percent from the 5,874 in the first half of 2010, the record year.
In the Middle District, filings were down 10.7 percent in the first half of the year compared to the first six months of 2012.
District filings were down almost 37 percent from 2010.
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.
Chapter 7 liquidations, which make up almost three-quarters of all filings, declined 11.2 percent in the district.
Chapter 13 wage-earner reorganizations fell 9.1 percent and Chapter 11 reorganizations dropped 13.5 percent.
Bankruptcy lawyers have said filings couldn't continue at the high pace of the past few years.
Economic indicators show that the unemployment rate has fallen below 10 percent in the county, metropolitan area, state and nation; home construction, sales and prices are rising; more jobs are being created; and commercial real estate leasing and sales are improving.
Bankruptcies hit record levels in 2010 as the national, state and local economies struggled through what has been called the deepest recession since the Great Depression.
As the recession began in late 2007, the bankruptcy court saw filings by real-estate petitioners, such as construction companies, subcontractors, developers and related entities.
Then small businesses began filing, followed by individuals and groups 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.
Bankruptcy filings
Jacksonville Division - Middle District of Florida
| Year | 6 months | Annual | 6 months | Annual |
| 2013 | 4,152 | 8,304* | 21,504 | 43,008* |
| 2012 | 4,419 | 8,312 | 24,074 | 45,970 |
| 2011 | 4,947 | 9,521 | 28,227 | 53,554 |
| 2010 | 5,874 | 11,439 | 34,104 | 66,618 |
| 2009 | 5,481 | 11,144 | 29,472 | 61,690 |
| 2008 | 3,862 | 8,412 | 19,522 | 42,557 |
| 2007 | 2,803 | 6,015 | 11,485 | 26,424 |
District declines
| Chapter | 6 months 2012 | 6 months 2013 | % decline |
| Chapter 7 | 17,441 | 15,489 | (11.2%) |
| Chapter 11 | 281 | 243 | (13.5%) |
| Chapter 13 | 6,341 | 5,763 | (9.1%) |
| Total** | 24,074 | 21,504* | (10.7%) |
Bankruptcy definitions
The glossary at uscourts.gov provides these definitions:
Chapter 7: The chapter of the U.S. Bankruptcy Code providing for "liquidation," that is, the sale of a debtor's nonexempt property and the distribution of the proceeds to creditors. In order to be eligible for Chapter 7, the debtor must satisfy a "means test." The court will evaluate the debtor's income and expenses to determine if the debtor may proceed under Chapter 7.
Chapter 11: A reorganization bankruptcy, usually involving a corporation or partnership. A Chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time. Individuals or people in business can also seek relief in Chapter 11.
Chapter 12: The chapter of the Bankruptcy Code providing for adjustment of debts of a "family farmer" or "family fisherman," as the terms are defined in the bankruptcy code.
Chapter 13: The chapter of the Bankruptcy Code providing for the adjustment of debts of an individual with regular income often referred to as "wage-earner" plan. Chapter 13 allows a debtor to keep property and use his or her disposable income to pay debts over time, usually three to five years.
Chapter 15: The chapter of the Bankruptcy Code dealing with cases of cross-border insolvency.
Hoping for a better real estate market
Jason Burgess, of The Law Offices of Jason Burgess and president of the Jacksonville Bankruptcy Bar Association, said he was not surprised by the decline in Chapter 11 filings.
"It appears the banks are giving businesses short-loan modifications or extensions in a hope that the real estate market continues to improve," Burgess said.
"While these extensions are alleviating the immediate need for bankruptcy, they are not all stopping the need for the bankruptcy in the long run. I believe that the commercial loans are still going to need restructuring through an organized reorganization such as Chapter 11," he said.
Burgess said he has not seen any long-term out-of-court modifications or extensions "that are truly going to help companies avoid bankruptcy."
"If a company does not have the cash flow to pay off a $2 million balloon today, a six-month extension or modification is not going to help them in the long run," he said.
"Sure it helps them keep the doors open now but realistically the company is not going to be able to pay the $2 million balloon in six months either," he said.
Burgess said it appears that banks are giving extensions so that they can receive some level of cash payment from the businesses until the real estate market recovers enough "for them to feel comfortable taking back the property to liquidate."
"None of this is truly being done to help the companies that are struggling," he said.
District continues to rank No. 3-5 nationwide
The Middle District of Florida continues to rank in the top five districts nationwide for bankruptcy filings.
For the 12 months ending March 31, the Central District of California, which is the Los Angeles area, tops the list in total filings and for filings of Chapters 7, 11 and 13 bankruptcies.
The Middle District of Florida ranked No. 3 in the number of total filings and the number of Chapter 7 filings, behind Central California and the Northern District of Illinois, which is the Chicago area.
The Middle District was No. 4 in the number of Chapter 11 filings. Central California was No. 1, followed by Northern Illinois and Delaware.
For Chapter 13, the Middle District was No. 5. Central California was No. 1, followed by the Northern District of Georgia, which is the Atlanta area; Northern Illinois; and the Western District of Tennessee, which is the Memphis area.
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