The blistering pace of bankruptcy filings continues in northwest Ohio, with 684 cases filed in July. It appears more likely that another record year is under way.
The pace of filings is expected to increase in coming weeks as debtors race to beat pending legislation that will tighten the nation's bankruptcy rules.
“We're definitely seeing a big increase in filings, and once that legislation passes, people are going to have a limited time to file in order to get in under the old rules,” said Stephen Priestap, a bankruptcy attorney in Toledo.
Mr. Priestap, who estimates his office is handling 25 percent more bankruptcy cases now than a year ago, said some clients are toying with filing.
“If the legislation does pass, I'm sending letters out to all those people to get them to file the cases quickly,” he said.
The reform legislation has been pushed by the credit card and banking industries, which say that many people abuse the bankruptcy system by writing off debts that they should be able to pay. The proposed changes would make it tougher to erase debts, instead requiring most people to pay off at least part of their bills.
There were a record 1.45 million bankruptcy filings nationwide last year, and new cases in the first three months this year are up 3 percent to 379,012 from the same period a year ago, the highest first quarter ever, according to the American Bankruptcy Institute in suburban Washington.
David Fickel, clerk of the U.S. Bankruptcy Court in Toledo, which covers 21 northwest counties, said it is “remarkable” the number of cases that have been filed so far this year - 5,009. The level is more than 4 percent higher than the pace last year, in which the annual total hit 7,989, shattering the previous record of 5,713.
Mr. Fickel predicted that after this month, year-to-date totals will surpass annual totals for all but last year, and he expects last year's figure to be easily eclipsed.
“If the trend continues, we will likely see in excess of 8,400 cases in Toledo during the current year,” he added.
Locally, Chapter 7 liquidation cases rose 3 percent to 4,611 through the first seven months of this year and Chapter 13 wage-earner repayment cases have jumped 20 percent this year to 389 for the year. There have been nine Chapter 11 corporation filings, versus eight last year.
The increase in Chapter 13 cases is due primarily to the larger number of foreclosure actions being taken locally, said Mr. Priestap, the attorney.
“People are trying to save their houses.”