Local bankruptcies soar, with no letup on horizon

5/2/2009

Bankruptcy filings in northwest Ohio soared for the second straight month, and one expert said the situation may not ease up until 2010.

"I think the expectation is that 2009 is going to be a very strong - if that's the right word - year for bankruptcy filings, and unless things turn around, 2010 will be a very difficult year as well," said American Bankruptcy Institute Chairman Reginald Jackson, a bankruptcy attorney in Columbus. "At the very least, it will be difficult for [the] last three quarters of this year."

April filings in U.S. Bankruptcy Court in Toledo, which covers 21 counties, totaled 901 cases, up 27 percent from the same month last year and the second straight month filings exceeded 900. The filings reached 916 in March, the first time over 900 since October, 2005, when bankruptcy reforms were enacted.

Nationwide in March, bankruptcy filings rose 41 percent over the same period a year earlier, totaling 121,413, the bankruptcy institute said.

For 2009's first four months, northwest Ohio cases totaled 2,904, up 30 percent from last year. There were 2,642 Chapter 7 liquidation cases, up 43 percent from last year. But the 251 Chapter 13 repayment cases were down 35 percent from a year ago.

The rise in liquidation cases and drop in repayment cases aren't surprising to Toledo bankruptcy attorney Thom Cafferty, though the reforms in 2005 were designed to encourage the filing of more repayment cases.

"If someone has lost their job, whether it was before or after the reforms, they're going to file bankruptcy. And there's a lot of job loss out there now," he said. "In fact, it's not just job loss, but even more, it is just reduced income - reduced hours, a spouse losing a job, or unemployment running out. It's dire out there."

Many cases involve mortgage default, but others involve common medical expenses, Mr. Cafferty said.

"The co-pays they have to deal with, the out-of-pockets - when you're faced with a big stack of co-pays and no job, you don't have a lot of choices."

Toledo attorney Amy Stoner said she still sees clients done in by credit card debt, but they're not necessarily credit card abusers.

"Previously, they could afford the minimum payment. But now they can't," she said.

Contact Jon Chavez at:

jchavez@theblade.com

or 419-724-6128.