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- 2010 - August - 13th -

Bankruptcies tracking to trump 2009

by Karen Brune Mathis
Managing Editor

Seven months into the year, bankruptcy filings in the Middle District of Florida continue at an annual pace of almost 68,200, exceeding 2009.

The number also surpasses 2005, when laws were revised late that year to try to make it more difficult to file, leading to a boom in petitions - 63,778 - to beat the changes.

In the Jacksonville division this year, filings could reach 11,799 at their current pace, higher than last year but below 2005.

Through July, 39,772 bankruptcy petitions were filed in the Middle District of Florida, up 13 percent from last year.

The district encompasses 35 of the state’s 67 counties and includes Jacksonville, Orlando, Tampa Bay, Ocala, Daytona and Fort Myers. It includes 10 million of the state’s 18 million residents.

There were 6,883 filings in the 16-county Jacksonville Division through July, up by 318 cases, an increase of 5 percent over last year.

The Jacksonville division consists of 16 counties in North Florida.

A small bright spot is that the pace of the increases slowed over the month, although that was anticipated.

“July was a little slow, but that is not unusual. Things are starting to pick up,” said Jerrett McConnell, an attorney with Friedline & McConnell and chair of the Jacksonville Bankruptcy Bar Association.

Jason Burgess, a bankruptcy attorney with Crumley, Wolfe & Burgess and secretary of the Jacksonville Bankruptcy Bar Association, has experienced the same.

“About this time every year, business begins to pick up. Families are taking their children back to school and are completing their vacations. Now is the time their financial difficulties begin to become their No. 1 priority again. I still expect this year to be well above last year’s numbers,” said Burgess.

McConnell said he expects filings to increase, especially in light of the state’s new foreclosure courts, created to call in senior judges to hear noncommercial foreclosure cases in the state’s 20 judicial circuits.

“Going into July, there was a backlog of over 17,000 foreclosure cases pending. Now that the foreclosure court is up and running, they are working to eliminate the backlog, thereby speeding up

the foreclosure process,” said McConnell.

“Once the foreclosures start ramping up, so will the bankruptcy filings,” he said.

Looking closer at July in the U.S. Bankruptcy Court Middle District of Florida:

• Chapter 7 liquidations dominated, numbering 29,662 filings and constituting 75 percent of all petitions. Those were up 15 percent through July over the year, but down slightly from the January-June year-over-year increase of 19 percent.

• Chapter 11 reorganizations, primarily used by companies but also by higher-income individuals, totaled 499 through July, up 32 percent over the year, but down from a 43 percent rise January-June this year vs. last year.

• Chapter 13 individual reorganizations numbered 9,592 filers, up 6.5 percent over the year, down slightly from the six-month increase.

• Chapter 12, for farmers and fisherman, rose to 18 filings from 17 last year. The Middle District has been leading the country in such filings.

Bankruptcy lawyers attribute the filings to the economic recession, job losses, foreclosures and other factors.

National and local economic indicators show continued struggles, and economists differ in their assessments whether the recession has ended and how strong the recovery will be.

Unemployment remains above 10 percent in Northeast Florida and near that rate nationwide.

Bankruptcy filings

U.S. Bankruptcy Court Middle District of Florida - Jacksonville Division

Year January-July Annual total
2006 2,272 4,184
2007 3,302 6,015
2008 4,613 8,412
2009 6,565 11,144
2010 6,883 11,799 (pace)

Source: U.S. Bankruptcy Court

January-July filings

Middle District of Florida Jacksonville, Orlando, Tampa

2006 2007 2008 2009 2010
Chapter 7 4,707 8,101 15,333 25,756 29,662
Chapter 11 64 124 222 378 499
Chapter 12 2 4 1 17 18
Chapter 13 3,285 5,523 7,636 9,009 9,592
Chapter 15 0 0 1 1 1
Total 8,058 13,752 23,193 35,161 39,772

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

kmathis@baileypub.com

356-2466

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