Saturday, August 13, 2011

Bankruptcy filings drop in Valley for 4th month

With attention focused on swelling federal-government deficits, Arizonans seem to be doing a better job getting their own debts under control.

Valley bankruptcy filings in July dropped for the fourth straight month, reported the U.S. Bankruptcy Court in Phoenix.

The latest numbers marked the biggest year-over-year improvement since before the recession began.

Individuals and businesses around metro Phoenix logged 2,153 bankruptcies in July, well below the recent peak of 2,813 in March.

More telling, filings decreased 16.7 percent from July 2010. That's the largest year-over-year decline for any month since late 2006.

"We're still busy, but we're not filling up the appointment book like before," said Joe Volin, a bankruptcy attorney in Mesa.

On a year-over-year basis, Valley bankruptcies rose for 51 straight months from November 2006 through January 2011. Since then, they have fallen six straight months.

"We already know that a lot of that debt, particularly involving credit cards, has been squeezed out," said Mike Sullivan, director of education at Take Charge America, a Phoenix debt-counseling firm.

While the economy remains sluggish and unemployment high, many consumers have decreased their borrowings - either voluntarily or otherwise - as lenders have gotten tougher about extending new credit.

It's also possible many of the most distressed consumers already have gone through the filing process.

"We're fielding fewer pre-bankruptcy calls, and people seem to be suffering less emotional distress over debt," Sullivan said.

The trend to fewer bankruptcies also is apparent statewide and nationally. Arizona had 2,888 filings in July. That was down from a March peak of 3,878 and represented an 18.1 percent decrease from July 2010.

Nationally, consumer filings fell 17.6 percent in July from July 2010, reported the American Bankruptcy Institute, using data from the National Bankruptcy Research Center.

On a year-over-year basis, filings have dropped every month so far in 2011 at the U.S. level.

"The continued decline in consumer bankruptcies in tandem with a sluggish economy is a reflection of the deleveraging of household debts and tightening of consumer credit over the past year," said the ABI's executive director, Samuel J. Gerdano.

While many Americans carry high debts, it typically takes a catalyst such as a job loss or sudden big medical bills to push them into filing, bankruptcy attorney Volin said.

Roughly 85 percent of Valley bankruptcies last month were Chapter 7 filings, which give debtors a fresh start after certain non-exempt assets are sold to pay creditors.

Chapter 13 debt-reorganization plans accounted for most of the rest.

by Russ Wiles The Arizona Republic Aug. 11, 2011 12:00 AM

Bankruptcy filings drop in Valley for 4th month

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