After a record number of bankruptcies in 2010, filings dropped 20 percent last year in the Middle District of Florida and 17 percent in the Jacksonville Division.
For the year, people and companies filed 53,554 bankruptcies in the Middle District of Florida, down almost 20 percent from the record 66,618 in 2010.
In the Jacksonville Division, the 9,521 filings were almost 17 percent below the 11,439 filings in 2010.
The national recession began four years ago, in December 2007, and officially ended in June 2009, although unemployment, while down, remains above 10 percent in Duval County, is 10 percent in Florida and is 8.5 percent nationally.
“The economy does show signs of improving, at least for the short term,” said bankruptcy lawyer Mark Mitchell, a shareholder with the Rogers Towers firm.
“The stock market has gone up, unemployment has slightly gone down and forecasted GDP growth has risen. However, there remain significant concerns when thinking about long-term recovery, such as the annual budget deficit, the mounting national debt and problems in Europe,” said Mitchell, president of the Jacksonville Bankruptcy Bar Association.
“Additionally, there’s no doubt that the continued precarious state of the commercial and residential real estate market has prevented — and will continue to prevent — a more robust recovery,” he said.
Area bankruptcy lawyers have been busy the past few years and said a slowing was to be expected. They say that the economy has stabilized to some degree from the recession, although a resumption of the foreclosure process could spark more filings.
Unemployment reached double-digits and consumers and businesses, especially those associated with real estate, faced particularly tough times.
Last year, the Middle District rate was the lowest since 2008, when 42,557 filings were made. In 2009, the court recorded 61,690 filings.
In the Jacksonville Division, the pace also was the lowest since 2008, when 8,412 filings were made. There were 11,144 in 2009.
In 2011, the average monthly filings within the Jacksonville Division fell to 793 from 953.
In 2010, there were more than 1,000 filings in five separate months, with more than 900 filings in six more months.
In 2011, only one month, March, recorded more than 1,000 petitions. The other months ranged from 650 in January to 871 in August.
Mitchell said that given the surge of bankruptcy filings in recent years, along with the economy showing some signs of improvement, the backlog of prospective bankruptcy filers might be shrinking.
“I tend to think this is probably true — filings can’t stay at record levels in perpetuity,” he said.
“However, over the past several years, many distressed borrowers — individuals and businesses in and outside of bankruptcy — were given some breathing room or even a second chance through the implementation of short-term loan modifications, many of which had maturity dates as short as three to four years out,” he said.
“I suspect that many of these short-term loan modifications will be maturing soon, and because we haven’t yet seen a more meaningful recovery in the economy and real estate market, this may lead these borrowers to bankruptcy, some perhaps for the second time,” he said.
Mitchell said those filers might represent a fairly small segment of bankruptcy filers, but still could be a factor this year and next year.
For the year in the Middle District:
• Chapter 7 liquidations were down 20 percent.
• Chapter 11 reorganizations were down 24 percent.
• Chapter 12 farmer and fisherman reorganizations were down 41 percent.
• Chapter 13 wage-earner repayment plans were down 19 percent.
Also, there were six filings in 2010 under the Chapter 15 plan, which involves insolvency involving more than one country, and one last year.
Chapter 7 remains the most-used plan, accounting for 75 percent of all filings. Chapter 13 accounts for 24 percent.
Chapter 11 filings, which attract the most headlines, make up just 1 percent of filings.
Trailer Bridge Inc. was one of the highest-profile corporate Chapter 11 filings last year. It petitioned for reorganization in November.
Last year also saw the emergence of former Jacksonville Jaguars quarterback Mark Brunell from Chapter 11. He filed in June 2010 and emerged from reorganization in December.
The Middle District encompasses 35 of the state’s 67 counties and covers the major metropolitan areas of Jacksonville, Orlando, Daytona, Tampa and Fort Myers. Within the Middle District, the Jacksonville Division covers 16 North Florida counties.
According to the U.S. Bankruptcy Courts website, from October 2010-September 2011, the Middle District of Florida was No. 3 in the number of filings nationwide.
For that 12-month period, the Central California District had 139,882 filings, the Northern Illinois District had 60,976 and the Middle District of Florida had 56,972.
Total U.S. filings were 1.47 million, down 8.1 percent from the prior 12 months.
Nina LaFleur, a director of the bankruptcy bar association, said that all of the economic factors will make 2012 an interesting year.
“We continue to believe that the decline in bankruptcy filings is due to the temporary slowdown of foreclosures as the lenders sort out the ‘robo-signing’ issues and get their paperwork in order,” said LaFleur, with the LaFleur Law Firm in St. Augustine.
“The dockets for the circuit courts continue to show repeated cancellations of foreclosure sales and rescheduling of foreclosure hearings. There are still many, many foreclosures in the pipelines which will eventually be processed,” she said.
LaFleur said she has noticed that not all banks pursue deficiency judgments.
“When an individual is faced with an actual collection lawsuit, they are prompted to take some action, such as filing bankruptcy,” she said.
“Without the threat of a lawsuit, many homeowners are not doing anything,” she said.
LaFleur expects to see an increase in bankruptcy filings “once the banks fire up their deficiency collections.”
Also, she does not expect the economy to recover for some time. She said the Federal Reserve announced that household borrowing has increased 9.9 percent, “the fastest monthly increase since November of 2001.”
She said that indicates people might spend money “they don’t have.”
LaFleur also referred to the European debt crisis, saying that “our economies are all interconnected.”
356-2466
Bankruptcy filings
Jacksonville Division
U.S. Bankruptcy Court
Middle District of Florida
| Year | Annual filings |
| 2011 | 9,521 |
| 2010 | 11,439 |
| 2009 | 11,144 |
| 2008 | 8,412 |
| 2007 | 6,015 |
| 2006 | 4,184 |
Source: U.S. Bankruptcy Court
Middle District of Florida Annual bankruptcy filings
| Chapter | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 |
| Chapter 7 | 9,012 | 15,798 | 28,850 | 45,532 | 49,682 | 39,930 |
| Chapter 11 | 126 | 231 | 523 | 648 | 777 | 588 |
| Chapter 12 | 3 | 7 | 2 | 34 | 29 | 17 |
| Chapter 13 | 6,163 | 10,387 | 13,181 | 15,473 | 16,124 | 13,018 |
| Chapter 15 | 0 | 1 | 1 | 3 | 6 | 1 |
| Totals | 15,304 | 26,424 | 42,557 | 61,690 | 66,618 | 53,554 |
Chapter 7 – Liquidation
Chapter 11 – Corporate or high-wealth individual 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