Bankruptcies climb as economy falls
by The Arizona Republic on Sep. 11, 2008, under Business EdgeTucson Citizen and The Arizona Republic
IN BRIEF
Tucson Citizen and The Arizona Republic
Consumer financial stresses aren’t showing signs of abating as Tucson-area bankruptcy filings in August climbed 34 percent above the number filed a year ago.
The U.S. Bankruptcy Court in Tucson recorded 352 filings in August as consumers struggled with housing woes, job losses and other problems.
U.S. filings rose 29 percent in August to 96,413, hitting the highest total in nearly three years, the American Bankruptcy Institute and National Bankruptcy Research Center reported.
Tucson’s job-growth engine has slipped into reverse. The local economy had 6,000 fewer jobs last month than in July 2007, according to latest figures from the Department of Economic Security.
Also, housing prices here are weak.
The median price of resale homes in Tucson dipped in June, to $188,726 from $195,000 in May, and foreclosure sales accounted for 17 percent of all resales in June, according the Southern Arizona Housing Market Letter,
“You’re seeing this domino effect,” Phoenix bankruptcy attorney Diane L. Drain said.
The list, she said, now includes subcontractors hurt by the housing slump, the upper echelon stretched too thin and homeowners caught by a surprise freeze in their home-equity lines of credit.
“Unemployment, medical problems and divorces still drive many bankruptcies, as before,” Drain said. “But, now, you’re seeing problems with real-estate people, investors and others.”
Three-quarters of Tucson-area filings are Chapter 7s, which offer a fresh start to people who qualify.
Most of the rest are Chapter 13 procedures built around debt-repayment plans.
The Tucson bankruptcy court includes filings from Pima, Pinal, Santa Cruz, Cochise, Graham and Greenlee counties. Nearly 90 percent of all Arizona filings are in Pima and Pinal counties.
