Citizen Staff and Wire Reports
Staff and Wire Report
RALEIGH, N.C. – The number of U.S. businesses and individuals declaring bankruptcy is rising amid the recession, despite a three-year-old federal law that made it much tougher for Americans to escape their debts, an Associated Press analysis found.
In March, bankruptcy filings jumped the highest across the West. In Arizona, filings rose 91 percent from a year ago. They were up 84 percent in Idaho, 82 percent in California and 79 percent in Nevada, though those were trumped by Delaware, home to many large corporations, which saw a 127 percent jump.
“There’s no end in sight,” said bankruptcy lawyer Bryan Elliott of Hickory, N.C., who is working seven days a week and scheduling prospective clients a month in advance. “To be doing this well and having this much business, it is depressing. It’s not a laugh-a-minute job.”
Nearly 1.2 million debtors filed for bankruptcy in the past 12 months, according to federal court records collected and analyzed by the AP. Last month, 130,831 sought bankruptcy protection – an increase of 46 percent over March 2008 and 81 percent over the same month in 2007.
In the Tucson sector, total bankruptcy filings in March were up 90 percent over the previous year, with 628 filings.
The majority of those filings were Chapter 7, which is liquidation for individuals and small businesses. There were 510 Chapter 7 filings in March, a 108 percent increase over March 2008.
Reorganization filings, or Chapter 13s, were up 44 percent.
Bob Lawless, a professor at the University of Illinois College of Law, said bankruptcies could reach 1.5 million this year and level off at 1.6 million next year – around the same time economists expect an economic recovery to begin.
The bankruptcy rate is climbing as well. In the past 12 months, about 4 people or businesses for every 1,000 people in the country filed for bankruptcy, according to the AP analysis. That is twice the rate in 2006, and close to the average of about 5 for every 1,000 in the decade leading up to the change in the law.
Lawless said the shame of bankruptcy may have eased somewhat in recent years, but added, “It’s still a very stigmatizing, traumatic event for most everyone who files.”
Bankruptcies up 91 percent in Tucson area