by Karen Brune Mathis
Bankruptcies soared to record heights in the Middle District of Florida in 2010 as the economic recession lingered in hard-hit Florida.
The U.S. Bankruptcy Court posted numbers on Thursday that showed 66,618 bankruptcy cases were filed in the Middle District of Florida, which includes Jacksonville.
That topped 2009 filings by 8 percent and 2005 figures by 4.5 percent.
People rushed to court in 2005 before the law changed that October to make it harder to file. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 created stricter bankruptcy eligibility requirements for consumer debtors.
However, the recession apparently trumped the fears or hesitance of individuals and businesses as they struggled with double-digit unemployment, residential foreclosures, financially strapped customers and vendors and other economic factors.
The national recession began in December 2007 and ended in June 2009, although it’s believed to have lasted until at least the first quarter of 2010 in Florida.
The president of the Jacksonville Bankruptcy Bar Association said the filings are a reflection of the unemployment rate. Area unemployment has been hovering over 10 percent, with Duval County’s seasonally adjusted rate at 12.5 percent in November.
“People are clearly struggling to maintain their debt obligations,” said Douglas Neway, association president and the Chapter 13 Standing Trustee.
“I wouldn’t be surprised to see a continued increase in filings into 2011 because many of the mortgage lenders that imposed a moratorium on foreclosures toward the end of 2010 are likely to engage in foreclosing on properties again in 2011,” he said.
“Bankruptcy would be the last resort for many to save their homes,” said Neway.
Bankruptcy attorney Robert Wilcox said the number of bankruptcy filings is a trailing indicator of the economy, meaning it follows in the wake of other negative indicators, such as high unemployment.
“There will need to be a substantial employment increase in the economy for the number of filings to decrease,” said Wilcox, with the Brennan, Manna & Diamond law firm.
Like Neway, he doesn’t expect a slowdown in filings.
“I do see it continuing for the foreseeable future,” he said.
The same for bankruptcy lawyer Jason Burgess, who also predicts the trend will continue.
“Unfortunately, it looks like 2011 might top 2010 because of the current economic situation,” said Burgess, secretary of the Jacksonville Bankruptcy Bar Association.
In the Jacksonville Division, the 11,439 bankruptcy filings in 2010 were almost 3 percent higher than the 2009 number, but 28 percent below 2005.
The Jacksonville Division consists of 16 North Florida counties. The Middle District consists of 35 of the state’s 67 counties and covers some major metropolitan areas, including Jacksonville, Orlando, Tampa, Fort Myers and Daytona.
• Chapter 11 filings, which primarily are corporate reorganizations but also include individuals with large debts and assets, reached 777 last year. That was 20 percent above 2009 and more than three times the number in 2005.
• Chapter 13 individual wage-earner reorganizations reached 16,124, up 4.2 percent over the year and up 33 percent from 2005.
• While 75 percent of all filings were Chapter 7 personal and business liquidations, the number, 49,682, was 9 percent higher than 2009, but 3.5 percent below 2005.
Whether or not it is a sign of easing, the December filings were below the December 2009 filings.
“One good thing is that bankruptcy seemed to slow at the end of the year,” said Burgess.
Filings throughout the district in 2010 peaked in March, when almost 6,600 bankruptcy petitions were filed. The monthly filings were at almost 4,500 or above every month, however.
Wilcox, who represents former Jacksonville Jaguars quarterback Mark Brunell in his Chapter 11 reorganization, said the majority of individual Chapter 11 filings are by people who own multiple properties, often rental properties, and seek to reduce the loan balance on their investment properties.
He said that while residential foreclosures and issues dominated 2010, “commercial real estate is the concern at this point,” he said.