Bankruptcies declining after record 2010

News

by Karen Brune Mathis

Managing Editor

After a year of record bankruptcy filings, first-quarter numbers are down almost 16 percent this year.

The U.S. Bankruptcy Court Middle District of Florida reports that 13,596 bankruptcy petitions were filed from January through March, down from 16,149 in the first quarter last year and not far ahead of the 13,331 in 2009.

Filings were down in every major chapter, including drops of almost 16 percent in Chapter 7 liquidations, 15 percent in Chapter 13 personal wage-earner reorganizations and 32 percent in Chapter 11 corporate and high-wealth individual reorganizations.

The Middle District covers 35 of the state’s 67 counties, including the divisions of Jacksonville, Tampa and Orlando.

The 16-county Jacksonville Division saw an almost 14 percent decrease in bankruptcy filings from 2,799 in last year’s first quarter to 2,415 this year. It was the fewest number of quarterly filings since 2008.

If the first-quarter pace continues in the Middle District, the number of bankruptcy filings could total 54,384 this year, down more than 18 percent from last year’s record 66,618.

However, a review of Jacksonville Division numbers shows that the first-quarter rate picked up in subsequent months during the past five years, with annual numbers exceeding the pace of the first three months.

Bankruptcy lawyer Nina LaFleur, a director of the Jacksonville Bankruptcy Bar Association, considers the first-quarter decline just a pause.

“The reason is due to the pause in foreclosure actions following the discovery of the robo-signers. This has allowed many people to stay in their house and not pay their mortgage,” she said, referring to a slowdown in foreclosures actions resulting from the discovery that some lenders were processing actions without the signatures.

“They are just delaying the inevitable. Once spurred into action, however, many people realize how beneficial bankruptcy can be and they routinely say, ‘I wish I had done this sooner,’” said LaFleur, of the LaFleur Law Firm in St. Augustine.

She expects that filings will catch up and anticipates a record year.

Last year’s district filings topped 2009 by 8 percent and even exceeded those in 2005, which was the year bankruptcy laws were changed to make it more difficult for consumers to file.

So far in the Middle District:

• Chapter 7 liquidations are down 15.7 percent, from 12,018 last year to 10,135 this year. It was the lowest first-quarter number since 2009.

• Chapter 11 reorganizations were down 32 percent, from 250 to 170, also the lowest since 2009.

• Chapter 13 wage-earner repayment program plans were down 15.1 percent to 3,288 from 3,872, the lowest number since 2008.

Chapter 12 farmer and fisherman reorganization filings were down from eight last year in the first quarter to two.

Bankruptcies reached a record in 2010, the year following the end of the December 2007-June 2009 national recession.

Bankruptcy lawyers said individuals and businesses struggled with foreclosures, financially strapped customers and vendors, unemployment and other economic factors.

While the national recession ended in mid-2009, economists said the recession in Florida, which was rocked by its economic reliance on real estate, didn’t end until early 2010.

In the Middle District, almost 75 percent of bankruptcies are Chapter 7 personal and business liquidations, followed by Chapter 13 wage-earner reorganizations at 24 percent and Chapter 11 reorganizations at just 1 percent.

[email protected]

356-2466

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

The Jacksonville Division covers 16 counties in Northeast Florida. Here are the number of filings in the first quarter of 2011 and the past five years. When annualized, the pace of filings in the first quarter was lower than the actual number of filings each year.