Bankruptcy filings 2nd-highest ever
9/2/2005The U.S. Bankruptcy Court in Toledo weathered a big financial storm last month with the filing of the second highest number of cases ever.
The 1,314 filings in August, up 48 percent from the same month a year ago, bring the year-to-date total to 9,011, enough to rank as the third highest year ever, with four months to go.
Given the expected continued rush of filers in September because of changes in the filing requirements taking effect in October, the court could set a record in 30 days.
Attorney Ryan Gerace, whose firm handles 11 percent of annual filings in the Toledo court, said, "I think definitely there's a rush to get in under the old law. At the same time I don't think gas at $3 a gallon helps the situation.
"It's really taking money out of people's pockets. They don't have a lot of disposable income to begin with and it's those kind of expenditures that are causing them to file - gas, heating costs, and other expenses."
Most filers for the 21 counties covered by the Toledo court had worked for firms that have closed or downsized, the attorney said. Many have lived on credit cards to keep going, but bankruptcy is inevitable for them, he said.
"I don't see an end to this, I really don't," Mr. Gerace said.
Attorneys and court officials said they expect September to be a huge month for filings as debtors try to get their cases filed under the current bankruptcy law. After Oct. 15, new standards will be applied, making it tougher to have debts forgiven or even to obtain long-term repayment plan status.
Dave Fickel, clerk in charge of the Toledo court, said he isn't so sure the reform law is driving the high filing volume.
"I think it will definitely slack off, but I don't know how much the reduction will be," he said. Cases were up 17 percent a year ago when there was no October deadline, he added.
Last year had 10,623 cases, the fourth consecutive annual record. Last month, Chapter 7 liquidation cases were again the bulk of the filings, with 113 filers opting for Chapter 13 repayment plans.
Nathalie Martin, a bankruptcy professor and scholar in residence at the American Bankruptcy Institute in Washington, said bankruptcy filings nationally have increased because of the reform law, but not to the extent of the increase in northwest Ohio.
"The East Coast has seen an [economic] recovery, and construction in the South is up," she said. "I do think you in the Midwest are having some problems."
Contact Jon Chavez at:
jchavez@theblade.com
or 419-724-6128.