After peaking in 2010, bankruptcy filings by consumers and businesses fell last year to the slowest pace since 2008 in the Middle District of Florida.
The 8,312 filings in the Jacksonville Division represents the lowest number since 6,015 in 2007.
Filings in the 16-county Jacksonville Division peaked at an average of 953 a month in 2010 and have fallen to an average 693.
That's an average of 260 fewer filings a month in 2012 from the peak and 100 fewer a month from last year.
Bankruptcy lawyers have said filings couldn't continue at the high pace of the past few years.
"The continued decline in bankruptcy filings is not surprising, as filings cannot stay at record levels in perpetuity," said Mark Mitchell, a shareholder in the Rogers Towers firm and chairman of the Jacksonville Bankruptcy Bar Association.
"It has been over four years since the beginning of the financial crisis in 2008, and many individuals and businesses have worked through their financial problems attributable to the crisis," Mitchell said.
"The continued decline in filings is further evidence that there is a limited pool of potential bankruptcy 'candidates,'" said Robert Heekin Jr. with the Stutsman Thames & Markey firm and treasurer of the Jacksonville Bankruptcy Bar Association.
"That said, we are still seeing continued weakness and uncertainty in the economy," he said.
Bankruptcy attorney Nina La-Fleur had another observation.
"Another factor affecting filing rates is that many folks are too broke to go bankrupt," said LaFleur of the LaFleur Law Firm in St. Augustine. She is a director of the Bar association.
"With no equity in their home or their vehicles and no available cash, they are living paycheck to paycheck and are virtually judgment proof. Accordingly, they do not see any reason to file," she 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.
Throughout the district, the 45,970 bankruptcy filings in 2012 represented the lowest number of fillings since 2008. They were down 14 percent from 2011 and 31 percent below the record 66,618 in 2010.
It's a similar story in the Jacksonville Division of the district. The 2012 filings of 8,312 are the lowest since 2007, down 12.7 percent over the year and 27 percent below the 11,439 in 2010.
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.
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.
Heekin issues cautions, however.
"Developments both home and abroad bear watching over the next several months. Increases in taxes, implementation of the health care legislation, uncertainty in the markets and questions about growth and stability overseas may all affect the bottom line of individuals and businesses here on the First Coast," Heekin said.
"If enough negativity persists, it would not be shocking to see filings increase following the exhaustion of tax refunds in the first and second quarter of this year," he said.
Dawn Lockhart, president and CEO of Family Foundations of Northeast Florida, has said in previous reports that fewer bankruptcies are a positive sign.
"Declining bankruptcy levels mean 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 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.
The U.S. recession began in December 2007 and emerged in June 2009, although economists said Florida's downturn 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 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.
Among the Middle District filings in 2012 compared with 2011 and the record in 2010:
• Chapter 7 liquidations were down almost 16 percent over the year and almost 32.5 percent from 2010. They accounted for about 73 percent of all filings last year, a lower proportion than the almost 75 percent in 2011 and 2010. Businesses and individuals use Chapter 7.
• Chapter 11 reorganizations fell about 16 percent from 2011 and 36 percent from 2010. While dominated by businesses, high-wealth individuals also seek protection under the chapter.
• Chapter 13 wage-earner repayment plan filings were down 8.5 percent over the year and 26 percent from 2010. They accounted for 26 percent of all filings, a higher proportion than 24 percent in 2011 and 2010.
Heekin offered an observation about business bankruptcy filings.
"Many businesses that have struggled through the current economic downturn have either continued to weather the storm without need to seek relief, or have otherwise shuttered as a result of an inability to reorganize," Heekin said.
"Often times, businesses that are on the verge of collapse have obligations to creditors which restrict the options they have to realistically reorganize under the Bankruptcy Code. It is sometimes better at that point to cease operations and conduct an orderly wind down of affairs," he said.
Housing foreclosures, credited for precipitating individual bankruptcy filings in past years before some lenders were caught robo-signing foreclosure documents, could resume.
"We are still seeing the banks reluctant to move forward with foreclosures," said LaFleur.
"Many clients have been living in their homes, without making payments, for three years or more. Often, it is not until the banks take action that then causes the homeowners to take action," she said.
"We believe there is a substantial shadow inventory of bankruptcy cases that will be filed," she said.
Mitchell said challenges remain to the long-term ecomonic recovery, including that many individuals and businesses still own real estate worth less than the amount of their mortgage.
"This is often referred to as being 'underwater.' In my opinion, this is perhaps the most significant impediment to a faster and more robust recovery," Mitchell said.
"While the downturn in real estate values has softened in certain areas, there remains a backlog of foreclosures, including pending foreclosure actions not yet completed," he said.
Mitchell said Florida is a judicial foreclosure state, which he said prolongs the foreclosure process in many instances. Judicial foreclosure is a court action.
"As a consequence, it may be several more years before we see meaningful appreciation in real estate values," he 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 total filings and for filings of Chapters 7, 11 and 13 bankruptcies.
Nationwide, U.S. Bankruptcy Court statistics for the 12 months that ended Sept. 30 show there were more than 1.26 million total filings, down 14 percent from the 1.47 million the year before.
Chapter 7 liquidations comprised about 70 percent of the total filings each year.
Among the national filings:
Total filings were 1,261,140. Central California was No. 1 with 111,909 filings; Northern Illinois was No. 2 at 57,289; the Middle District of Florida was No. 3 with 47,513.
Total Chapter 7 filings were 874,337. Central California was No. 1 with 85,130 filings; Northern Illinois was No. 2 at 40,474; the Middle District of Florida was No. 3 with 34,611.
Total Chapter 11 filings were 10,597. No. 1 was Central California, at 966 filings; No. 2 was Southern New York, 861; No. 3, Delaware, 554; No. 4, the Middle District of Florida, 518.
Total Chapter 13 filings were 375,521. No. 1 was Central California, 25,803; No. 2, Northern Georgia, 20,493; No. 3, Northern Illinois, 16,497; No. 4, Western Tennessee, 12,864; No. 5, Middle District of Florida, 12,367.
Chapter 9, 12 and 15 bankruptcies make up the rest of the filings.
Mitchell said that while the economy is improving, he sees bankruptcy filings continuing.
"In short, while things are improving, so long as we continue to face moderate headwinds, such as a substantial number of individuals and businesses 'underwater' on real estate, I believe bankruptcy filings will continue near historical averages, but certainly not at the levels of 2009 and 2010," Mitchell said.
Lockhart at Family Foundations has said she often sees families turn to bankruptcy to try to save their home from foreclosure.
"We encourage people to seek help from certified financial counselors," she said.
Heekin urges consumers to be proactive.
"As always, it's best to be as prepared as possible to face the challenges of this year and beyond. The earlier individuals and companies seek counsel to deal with pending debt issues, the better," Heekin said.
Jacksonville Division, U.S. Bankruptcy Court, Middle District of Florida
Source: U.S. Bankruptcy Court
Annual bankruptcy filings
Middle District of Florida
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 debtors 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 9: The chapter of the Bankruptcy Code providing for reorganization of municipalities, which includes cities and towns, as well as villages, counties, taxing districts, municipal utilities and school districts.
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.