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Bankruptcies down 17%, District still No. 3 in nation

22.05.12

By Karen Brune Mathis, Managing Reviser

Bankruptcy filings continue this year at a pace well below last year’s record rate, according to U.S. Bankruptcy Court Centre District of Florida statistics.

In the Middle District of Florida, the pace of filings from January to October was 17.4 percent below last year’s annual speed.

In the Jacksonville division, the pace is 15 percent slower than last year.

Nonetheless, the Midway District continues as one of the most active districts in the country for bankruptcy filings.

According to the U.S. Bankruptcy Courts website, from October 2010-September 2011, the Medial District of Florida was No. 3 in the number of filings.

For that 12-month while, the Central California District had 139,882 filings, the Northern Illinois Province 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 erstwhile 12 months.

Area bankruptcy lawyers have been busy the past few years, and a slowing was to be expected.

“Although it seemed like the include of filings in the Middle District would continue on an upward trend for some time, much like actual estate values four years ago, such ‘growth’ was ultimately unsustainable and prone to a retirement,” said Rob Heekin with the Stutsman Thames & Markey firm and secretary of the Jacksonville Bankruptcy Bar Guild.

“From our perspective, the decline in filings this year can be attributed to a number of factors: the curtness generally stabilizing, a drop in the size of the remaining ‘pool’ of potential filers and a ordinary slowdown of the judicial foreclosure process as a result of several factors,” he said.

He said those factors register, but are not limited to, mandatory mediation programs, additional federal programs designed to serve homeowners with modifications, and banks taking the time to ensure that loan processing errors are resolved before continuing the convert.

Heekin said that foreclosures and unemployment drove the past wave of bankruptcy filings.

“So large as there remains a risk for a second ‘wave’ of foreclosures or layoffs, there remains the developing that we’ll see yet another uptick in filings,” he said.

Bankruptcy attorney Edward Jackson, a skipper of the Jacksonville Bankruptcy Bar Association, said the initial surge of bankruptcies has come through.

“The stream in bankruptcies that we experienced in the first years of the recession may be behind us now. This does not mean that the recession is over, upright that most consumers who needed to file for bankruptcy have done so,” Jackson said.

“Most debtors who cannot pay their have faith card debt because of a decline in income have already filed bankruptcy. Many people who cannot pay their credit bank card card joker debt are unemployed and cannot afford to file bankruptcy until they have some income,” he said.

Jackson said he is seeing more bankruptcies caused by blemish businesses than in 2010, but not enough to make up for the drop in the number of consumer bankruptcies this year.

Attorney John Macdonald with Akerman Senterfitt said the control might not be worse, but it isn’t any better, either.

“Although the economists will tell us that the recession has ended here in Florida, the genuineness is that we appear to be stalled at a low but relatively stable level of activity, with the general insight that things are not getting any worse but are getting no better,” he said.

“The presentiment is that the modest decline in filings does not reflect any significant economic upswing, but only that the initial slug of bankruptcy filings by those facing financial hardship has now subsided. Plenitude of people are still facing tough times, and there will still be significant filings to come, it is perfectly that the first wave has washed through,” he said.

Attorney Kevin Paysinger with the Bankruptcy Law Unchangeable of Lansing J. Roy said this time of year is considered a slower time for bankruptcy filings.

“Consumers are focusing on next of kin and the holidays and some will push their financial distress off to the New Year,” said Paysinger, a governor with the Jacksonville Bankruptcy Bar Association.

“Also, because a consumer’s tax refund is subject to turnover to a trustee, consumers often hold-up to file until they get their tax refund at the beginning of the year, which is a source of funds to pay their bankruptcy attorney,” he said.

“Clearly, people still file bankruptcy during the last two months, but overall the last two months seems to be a little slower,” he said.

The Midway District accounted for almost 4 percent of all U.S. filings, while Central California accounted for almost 10 percent, while Northern Illinois represented 4.2 percent.

The Mesial District encompasses 35 of the state’s 67 counties and covers the grave metropolitan areas of Jacksonville, Orlando, Daytona, Tampa and Fort Myers.

The clip of bankruptcy filings this year will be affected by what happens with foreclosures, which slowed in the wake of questions about peculiar signatures on paperwork.

In the Jacksonville division, the average monthly filings are 811 this year, down from 982 last year and 938 in 2009.

The dip’s toll has been clear in the trends.

For the full calendar year, Middle District bankruptcy filings rose from 15,304 in 2006 to 61,690 in 2009 and peaked at 66,618 last year. The reckon so far in 2011 is about 55,000.

Bankruptcy attorneys attributed last year’s record rate to effects of the 2007-09 economic downturn and the credit crisis.

Unemployment reached double-digits and consumers and businesses, particularly those associated with real estate, faced particularly tough times.

The inhabitant recession ended more than two years ago. The Florida recession didn’t end until early 2010, economists have said.

Unemployment has fallen below 10 percent nationally but remains in twofold-digits in Florida and Jacksonville.

The U.S. Labor Department reported that the national unemployment anyway was little changed in October at 9 percent.

The Florida rate dropped from 10.7 percent in August to 10.6 percent in September.

In Duval County, the sort fell to 10.83 percent in September from 11.14 percent in August and 12.38 percent in September 2010, according to status numbers adjusted for seasonality by the University of North Florida Local Profitable Indicator Project.

The October rates for Florida and its counties are scheduled to be released Friday.

Within the Waist District, the Jacksonville Division covers 16 North Florida counties.

The 45,835 precinct filings in the first 10 months were down 19.5 percent from the 56,958 in the same period in 2010.

Filings in the Jacksonville classification from January-October fell 17.4 percent from last year to this year, with 1,711 fewer filings.

At the 10-month tread, the division could end the year with about 9,730 filings, compared with last year’s 11,439.

In the Middle Locality, filings are down by more than 11,123, or 19.5 percent, in the first 10 months of the year compared to the first 10 months of 2010.

If filings fragments at the 10-month pace, the Middle District could end the year with about 55,002 bankruptcy petitions, down more than 11,600 from last year.

Among the Heart District filings:

• Chapter 7 liquidations were down 19.1 percent, while continuing to account for 75 percent of all filings. Businesses and individuals use Chapter 7.

• Chapter 13 wage-earner reorganizations are down 20 percent. The filings account for 24 percent of all filings.

• Chapter 11 reorganizations are down 23 percent. While dominated by businesses, bankruptcy lawyers say foremost-wealth individuals are also seeking protection under the chapter. The use of Chapter 11 by individuals has been increasing, and the preponderance of those filings are attributed to real estate investments, according to court word.

Bankruptcy Judge Paul Glenn in the Middle District, the immediate past chief bankruptcy arbitrate in the district, said earlier this year that since the recession began in late 2007, the court saw filings by right-estate related petitioners, such as construction companies, subcontractors, developers and common entities.

Then small businesses began filing, followed by more individuals who are invested in legitimate estate and can no longer carry the debt because they can’t sell the properties or make enough rental takings from them.

Looking toward 2012, attorney Mark Mitchell, who is president of the Jacksonville Bankruptcy Bar Camaraderie, expects the pace of filings to continue.

“Most economists are predicting another year of flat growth in 2012, forecasting GDP growth at 1.5 to 2 percent,” he said, referring to massive domestic product, a measure of the nation’s economic growth.

“Given the ongoing state of the economy and the relatively high unemployment figures, I believe that bankruptcy filings will expected stay the same during 2012,” he said.

Source: Jacksonville Daily Record