Area bankruptcy filings soar past 1,000 in March

For the first time since federal reforms were enacted five years ago, the number of monthly bankruptcy petitions filed in northwest Ohio have exceeded 1,000.

In a noticeable consequence of the latest recession, March filings in the 21 Ohio counties covered by U.S. Bankruptcy Court in Toledo totaled 1,063, up 16 percent over the same month a year ago.

Toledo attorney Ty Mahaffey, of Ty Mahaffey & Associates LLC, said bankruptcy law offices around the region were swamped last month. He attributed it to people getting their tax refunds and using them to pay for the process to erase or stave off their debts.

The filings are fueled by home foreclosures, job loss, and non-work-related injuries leading to substantial medical bills, he said.

"It's more the kinds of things that people don't have a lot of control over. It's more than just irresponsible spending," he said. "Most people live right to the edge of what they can afford."

Cases locally for the first three months of the year reached nearly 2,200, a pace that would put the year in the top five filing years.

The last time bankruptcy petitions exceeded 1,000 in one month was October, 2005, the same month that federal reforms were enacted, making it harder for citizens to file for protection from their creditors.

That law set tougher standards to get debts eliminated, required filers to get mandatory credit counseling, and imposed higher filing fees.

Monthly filings in 2005 prior to the reforms taking effect exceeded 1,000 eight times.

Last year, filings twice exceeded 900, compared to none the previous three years.

Asked whether the newly passed health-care reform will limit the need for bankruptcies, Mr. Mahaffey said it could help in cases of sudden catastrophic illness or injury resulting in huge medical bills. But some being forced to buy insurance could be forced into bankruptcy, he said.

"You would hope health-care reform would help. But oddly enough, if the government is forcing people to pay for it and they're not budgeting for it, that could be a problem," he said.

So far this year, there have been 1,961 Chapter 7 liquidation cases filed in the Toledo court, up 8 percent from the same period a year ago.

Chapter 13 wage-earner repayment cases total 190 for the first three months, up 2 percent from a year ago. There have been eight Chapter 11 business reorganization cases, up from three a year ago.

Historically, April case numbers tend to be similar to March, and tend to be lower in the summer before picking up in the fall.

Contact Jon Chavez at:

jchavez@theblade.com

or 419-724-6128.