Toledo bankruptcies increased in 2017

1/2/2018

After seven consecutive years during which area bankruptcies declined steadily, that trend ended in 2017 with filings increasing by 1 percent, according to year-end statistics released Tuesday by the U.S. Bankruptcy Clerk of Courts office.

In 2017 there were 4,015 cases filed in U.S. Bankruptcy Court in Toledo, which oversees 21 counties in northwest Ohio. That compared with 3,959 cases in 2016.

Bankruptcies also rose in December with 266 cases filed, an increase of 14 percent from a year prior.

Local bankruptcy attorney Elliot Feit said it’s unclear whether the rise in bankruptcies is the start of a trend or just a one-year aberration.

“I’d like to think it’s that people are making more and spending more. But what I’m seeing is people who are really down and out,” Mr. Feit said.

“Back in the day, there was gigantic credit card debt, people with over $100,000 in debt. But now I’m seeing people with $30,000 in debt who can’t make it, more people with high medical bills, people who were in accidents and had no car insurance,” the attorney said. “I can’t compare it with anything that’s happened in the past years.”

Changes to the nation’s bankruptcy law 12 years ago raised filing fees from $85 in 2005 to a current $335.

But if someone’s income is less than 150 percent of the federal poverty level — $18,090 for an individual — the court can waive that filing fee.

Mr. Feit said in 2017 he saw an increase in waived fees and did a lot more pro bono work because debtors were too poor to file bankruptcy.

“I’m really seeing people hurting more than I’ve ever seen them,” he said.

Attorney Thom Cafferty said he is seeing the same thing.

His caseload in 2017 was very similar to 2014, 2015, and 2016. But, “a good number of my clients paid the filing fee in installments because they couldn’t afford the $335 filing fee,” he said.

Many clients he saw were living only on disability or veteran’s pensions. “They change their phone numbers because they are getting hounded by creditors. But they have nothing to protect,” he said.

Mr. Caffety said another 2017 trend he noticed was an increase in the number of people forced to file a Chapter 13 repayment plan instead of a Chapter 7 discharge of debt because they already had filed a Chapter 7 within the past eight years. By law a debtor can only file Chapter 7 once every eight years.

“Generally speaking, if they’re filing Chapter 13 it means their economic situations have not improved,” Mr. Cafferty added.

In 2017 there were 3,638 Chapter 7 cases filed in the Toledo court, just one less case than was filed in 2016. However, there were 370 Chapter 13 cases filed, an increase of 15 percent from the year prior.

Attorney Jerry Purcel said one thing that might account for the slight rise in bankruptcies in 2017, and which bears watching in 2018, is the growing student loan debt problem.

Many of his clients were saddled with large student loans, which cannot be discharged in bankruptcy.

“They can’t get rid of their student loans, so they don’t need much to get in over their heads with other debts,” Mr. Purcel said. “Once they’re out of school they can’t defer them any more and you’re seeing more and more student loans coming due,” he said.

Contact Blade Business Writer Jon Chavez at jchavez@theblade.com or 419-724-6128.