Bankruptcy filings climb in February
1% increase blamed on change in laws, not local economy
3/2/2012Bankruptcy filings in northwest Ohio rose for the first time in 17 months in February, but a local bankruptcy expert said the slight upward trend likely was because of a change in the nation's bankruptcy laws and not a sign of a downturn in the Toledo-area economy.
A total of 492 cases were filed last month in U.S. Bankruptcy Court in Toledo, which covers 21 counties.
That figure is an increase of 1 percent from February, 2011.
The last time monthly bankruptcy filings exceeded the prior year's was August, 2010, when a 6 percent uptick was reported.
But nearly 100 cases were filed in the final three days of February, and 42 cases alone were filed on Wednesday.
Toledo bankruptcy attorney Elliot Feit said the surge "has nothing to do with the economic situation in the Toledo area."
Instead, Mr. Feit said, it has to do with the attempts by bankruptcy clients to comply with 2005 changes in federal bankruptcy statutes.
In 2005, a "means test" was mandated to assure a filer was eligible for bankruptcy. The test looks at six months' worth of income, after which a bankruptcy filing can be made in the following month.
With so many filings coming in the final days, "that tells me that those filings were in the works and the income paperwork already had been done based on the Aug. 1-through-Jan. 31 six-month period," Mr. Feit said. "Those cases had to be filed by the end of February or else they'd have to do the paperwork all over again. It was a timing issue more than anything," he added.
Through February, 818 cases have been filed, a decrease of 10 percent over the first two months of 2011, the court said Thursday.
A total of 727 cases are Chapter 7 liquidations, down 9 percent from last year.
There have been 84 Chapter 13 wage-earner repayment cases filed, a decrease of 20 percent, and just two Chapter 11 business reorganization cases, down from six cases through February of last year.