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- 2010 - July - 13th -

District bankruptcies nearing annual 70,000

by Karen Brune Mathis
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

Year January-June Annual total
2006 1,948 4,184
2007 2,803 6,015
2008 3,862 8,412
2009 5,481 11,144
2010 5,874

Source: U.S. Bankruptcy Court

January-June filings

Middle District of Florida Jacksonville, Orlando, Tampa

2006 2007 2008 2009 2010
Chapter 7 3,978 6,720 12,780 21,537 25,458
Chapter 11 51 103 205 308 440
Chapter 12 2 3 1 11 15
Chapter 13 2,812 4,659 6,535 7,616 8,190
Chapter 15 0 0 1 0 1
Total 6,843 11,485 19,522 29,472 34,104

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

Year January-June Annual total
2006 6,843 15,304
2007 11,485 26,424
2008 19,522 42,557
2009 29,472 61,690
2010 34,104

Source: U.S. Bankruptcy Court

kmathis@baileypub.com

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