The floodgates shut.
After new bankruptcy cases in the Toledo area swelled to 5,540 in October from people trying to beat a mid-month deadline after which filing became tougher and more expensive, just 45 cases were filed in November.
It was the lowest monthly figure at U.S. Bankruptcy Court in Toledo in more than a decade.
"Everybody and their brother filed before Oct. 17," said Louis Yoppolo, a Toledo attorney.
"I don't know that anybody predicted it would be this low, but everybody believed it would trail off quite a bit. The requirements of the new law make it more difficult."
Local attorneys expected a drop off, but the plunge seemed more severe than most anticipated. They say higher fees and costs have deterred some filers, and many rushed to file ahead of the law change.
But those attorneys and other experts predict cases will rise sharply early next year and get back to more normal levels within months. Higher winter heating bills and a new federal policy requiring higher minimum payments on credit card bills will push some financially strapped people into bankruptcy, experts said.
For the 21 northwest Ohio counties covered by the Toledo court, the new cases last month were 125th as many as the month before, and were down 770 from the same month lastyear. Until this year, the court typically handled 800 to 1,000 new cases a month. This year, that figure generally climbed to 1,000 to 1,500, except for 2,205 in September and more than double that figure in October.
For the year, the court has received 16,801 cases, crushing last year's record 10,623 with a month still to go.
The drop-off in cases occurred nationwide.
Bankruptcies surged in the weeks before the new law took effect, as 315,000 filed in the week before Oct. 17. In the next five full weeks, just 25,600 cases were filed nationally, according to Lundquist Consulting Inc., a Burlingame, Calif., firm that tracks such information.
The new law makes it harder for some people to file to erase their debts, requires pre-filing financial counseling, and resulted in higher filing and attorney fees. The changes were sought by the credit card and lending industries who said it was too easy to walk away from one's debts.
Toledo attorney Stephen Priestap said that, during the glut of filings in October, many attorneys "wiped their decks clear." But, he added, "I expect [filings] to start to bounce back as we get into January and February.
Some potential filers are deterred by the higher costs, which include higher lawyer fees, moving to an average of $700 to $1,000 per case, up from $600 to $700 before, he said.
Filing fees also jumped. For a Chapter 7 case, in which a debtor tries to get most bills forgiven, filing is $274, up from $209, plus filers have to pay for credit counseling, typically $50. For a Chapter 13 case, in which the individual sets up a prepayment plan, the fee dropped by $5 to $189, but there's also the added credit counseling fee.
Mr. Yoppolo said "there's a lot of fear and reluctance" among prospective filers now, and many lawyers are trying to "retool" for the new law's requirements.
Elliot Feit, another local attorney, also credited the higher charges as a reason for the temporary drop in filings. Some candidates, he said, have said they are waiting for their income-tax refunds early next year to be able to afford to file.
He predicts filings will greatly increase by February.
"People are still going to need help," he said. "It's heartbreaking. Some of these families there's no way they can pay [the court and attorney fees]."
David Fickel, clerk of the Toledo bankruptcy court, said the huge decrease in cases was not unexpected. But he expects the year's total cases will exceed 17,000, up more than 60 percent from last year and marking the fifth consecutive year of record petitions.
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