Bankruptcy filings down for 7th year in northwest Ohio

New cases in 2016 declined 4 percent

1/4/2017

Area bankruptcy filings in December fell, making 2016 new cases in northwest Ohio down 4 percent for the year and dip to a level not seen since Bill Clinton was president.

Debtors filed 3,959 bankruptcy petitions last year in the 21-county U.S. Bankruptcy Court’s Toledo district.

It was the seventh consecutive year that bankruptcy filings have declined and represented the first time filings were below 4,000 since 1995.

There were 230 cases filed in December, down 9 percent from December, 2015.

“It’s not surprising. It’s been very quiet the last month,” Toledo bankruptcy lawyer Gordon Barry said. “There’s been a lot of inquiries, people coming in to ask questions. But De- cember usually is a quiet month, and that was the case.”

There were 3,639 Chapter 7 liquidation cases filed in 2016, down 3 percent from the year before. There were 315 Chapter 13 repayment cases filed, off 12 percent. There were just four Chapter 11 reorganization cases filed and a Chapter 12 family farm reorganization.

In December, there were 204 Chapter 7 cases, down 10 percent, and 26 Chapter 13 cases, down 4 percent.

For the first seven months of 2016, bankruptcy filings declined every month but March, which typically sees a rise in petitions after people receive their tax refunds.

But last year saw a strange blip — filings rose 3 percent from August through October — before dropping again in November. At the time, Mr. Barry’s bankruptcy partner, Elliot Feit, suggested the rise was because of credit card companies starting to issue credit again to the subprime consumer market.

And Mr. Barry said that factor is continuing and does not bode well for 2017.

“I think [filings] have been trending down several years, but the subprime car loans are really strong out there and some subprime credit cards are being issued again. Debt is increasing,” he said. 

And student debt is a factor, too, Mr. Barry added. 

Student loan debt generally cannot be reduced or erased by a bankruptcy filing. But Mr. Barry said loan companies have become more aggressive in attempting to collect money from students’ parents, who may have co-signed for college loans. “They are going after wages and Social Security checks to collect on a student’s loans,” he said. “For that and other reasons, the professional prognosticators are thinking [2017] is going to be an uptick year.”

Contact Jon Chavez at: jchavez@theblade.com or 419-724-6128.