Bankruptcy Filings Surge
Economy, rising debt, foreclosures fuel 38% jump in '07
Desperate people are filing into the office of Indianapolis bankruptcy attorney Mark Zuckerberg at a rate he hasn't seen in years.
Personal bankruptcy filings in the nation rose 38 percent from 2006 to 2007. Total bankruptcy filings, including those from businesses, rose to 850,912 compared with 617,660 in 2006.
Indiana placed fourth among states with the most filings per capita behind Tennessee, Georgia and Alabama. The Hoosier state is usually in the top 10, though.
The nonprofit American Bankruptcy Institute, which releases these statistics annually, blamed the ailing economy, higher mortgages and other debt for pushing people over the edge.
Zuckerberg agreed, but said that in Indianapolis foreclosures have really put the final nail in the coffin.
"People only make so much money, and they're looking for ways to keep afloat," he said.
Personal bankruptcy filings rose to 822,590 in 2007, up from 597,965 in 2006, the institute said, citing data from the Administrative Office of the U.S. Courts.
Until recently, many people didn't think they could file for bankruptcy because of a 2005 federal law that made it tougher to do so. People sought other options, and the number of bankruptcy filings plummeted.
Earlier in the decade, bankruptcies averaged 1.5 million annually.
"I would think that this year, based on the economy and foreclosures, we'll get back to where we used to be," Zuckerberg said.
Business bankruptcies, meanwhile, increased 44 percent to 28,322 last year from a record low of 19,695 in 2006, the institute said. Annual filings averaged 35,293 in the decade ending in 2007.
In Indiana, attorney Paul T. Deignan said he has noticed a gradual increase in the number of business bankruptcies, but not a spike. That may happen later this year, though.
"Businesses are far more sensitive to sales and credit availability, certainly smaller businesses," said the partner at Sommer Barnard, home to one of the largest business bankruptcy practices in the state.
The largest increases in number of filings came from California and Nevada, the institute said, where the real estate bust has hit particularly hard.
Indiana has been spared from such extremes in the real estate market, but in general, Deignan said, businesses here are in the same boat as businesses across the nation. Sales are tight, and credit is tight.
"I don't think we're any worse off or any better off," he said.Source: Indianapolis Star April 18,2008