Here are some grim statistics for the first quarter of 2010. The number of bankruptcy filings in Tampa/Fort Myers division (Polk included) jumped almost 21%. This is mirrored by the eerily similar rise of 21% in bankruptcy cases in the Middle Disctrict of Florida (including Orlando and Jacksonville). In fact, the 16,149 bankruptcy cases filed there gave the Middle District bankruptcy court the unenviable record of being the second busiest bankruptcy court in the country, behind only the Central District of California bankruptcy court.
March 2010 was one of the Middle District bankruptcy court’s busiest month on record. It was third only behind the two months prior to the time when the bankruptcy laws changed with the passing of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). The BAPCPA was supposed to deter individuals from filing for bankruptcy, especially Chapter 7 bankruptcy as a means of copping out of their tax debts.
And from the look of things, there seems no evidence of this trend abating anytime soon.
Experienced bankruptcy lawyers predict that the peak in number of bankruptcies will only come in a year or 18 months’ time before the numbers slide. US Bankruptcy Judge Catherine Peek McEwen is handling 6,500 cases in Tampa. The District Chief Judge in Jacksonville had forewarned his judges to anticipate a year of record numbers of bankruptcy filings.
What appears to be affecting consumers in Florida most are the combined effects of the state’s 12.2% unemployment, low housing prices and a huge backlog of foreclosure cases. Although banks are starting to lend again at a ‘modest’ level, the unemployment rate is yet to show a significant drop. Unemployment and bankruptcy both go hand in hand and are usually the last to be overcome in an economic recession. It is not uncommon to find unemployment still rising even after the recession has officially ended. Bankruptcy improvements tend to show even later as it is often a last resort people take for themselves and their businesses.
There has been a wide range of businesses going bankrupt from property developers to retailers. Even professionals and certain franchises have not been spared. Recently, a local Church’s Chicken, several Dunkin’ Donuts franchisees and an Arby’s chain have all filed for bankruptcy.
Of those who file for personal bankruptcies, most have problems with paying for their properties. Banks have been criticized for being reluctant to reduce principal amounts in mortgages and slow in revising mortgage terms to help struggling borrowers.
Filed under Chapter 7 (Tampa) by on Jul 2nd, 2010. Comment. 
Here are some grim statistics for the first quarter of 2010. The number of bankruptcy filings in Tampa/Fort Myers division (Polk included) jumped almost 21%. This is mirrored by the eerily similar rise of 21% in bankruptcy cases in the Middle Disctrict of Florida (including Orlando and Jacksonville). In fact, the 16,149 bankruptcy cases filed there gave the Middle District bankruptcy court the unenviable record of being the second busiest bankruptcy court in the country, behind only the Central District of California bankruptcy court.
March 2010 was one of the Middle District bankruptcy court’s busiest month on record. It was third only behind the two months prior to the time when the bankruptcy laws changed with the passing of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). The BAPCPA was supposed to deter individuals from filing for bankruptcy, especially Chapter 7 bankruptcy as a means of copping out of their tax debts.
And from the look of things, there seems no evidence of this trend abating anytime soon.
Experienced bankruptcy lawyers predict that the peak in number of bankruptcies will only come in a year or 18 months’ time before the numbers slide. US Bankruptcy Judge Catherine Peek McEwen is handling 6,500 cases in Tampa. The District Chief Judge in Jacksonville had forewarned his judges to anticipate a year of record numbers of bankruptcy filings.
What appears to be affecting consumers in Florida most are the combined effects of the state’s 12.2% unemployment, low housing prices and a huge backlog of foreclosure cases. Although banks are starting to lend again at a ‘modest’ level, the unemployment rate is yet to show a significant drop. Unemployment and bankruptcy both go hand in hand and are usually the last to be overcome in an economic recession. It is not uncommon to find unemployment still rising even after the recession has officially ended. Bankruptcy improvements tend to show even later as it is often a last resort people take for themselves and their businesses.
There has been a wide range of businesses going bankrupt from property developers to retailers. Even professionals and certain franchises have not been spared. Recently, a local Church’s Chicken, several Dunkin’ Donuts franchisees and an Arby’s chain have all filed for bankruptcy.
Of those who file for personal bankruptcies, most have problems with paying for their properties. Banks have been criticized for being reluctant to reduce principal amounts in mortgages and slow in revising mortgage terms to help struggling borrowers.
Filed under Chapter 7 (Tampa) by on Jun 4th, 2010. Comment.
There are certain types of debts that you cannot be forgiven of even under bankruptcy, such as child support and tax debt. Another such debt is student loans. When students take on too much debt in the form of student loans to obtain their degree, they may not have the means to repay these loans even when they graduate and start earning a living. The problem is compounded when these loans are taken from private lenders (as opposed to government backed loans).
In today’s world, having a college degree is almost a must if you want to earn a decent salary. But too many people get into huge debts in order to get a degree, and when life’s uncertainties happen such as an illness, economic recession or divorce it makes it difficult for them to continue paying for the loans.
The problem with student loans is that it cannot be easily wiped out by bankruptcy. In order to do so, you have to prove undue hardship, not just an inability to afford the repayments.
Before 2005, only government backed loans were non-dischargeable. The rationale for this is that borrowers who do not repay their loans would affect the national budget. In other words, the American public pays for the borrower’s default, which is unfair. The same goes for loans that come from charitable or non-profit organizations. These organizations give out loans as a means to generate revenue since their core activities do not earn profit. Therefore, such loans should not be easily forgiven. Other categories of student loans such as private student loans were subject to cancellation if you come under bankruptcy protection.
But all of this changed in 2005 when the government put new legislation into effect designed to make it more difficult for people to be declared bankrupt. The new legislation was aimed at preventing people from defaulting on their loans without trying hard enough to repay them. This legislation was called the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). One aspect of this legislation elevated the status of student loans (including private student loans) to prevent them from being dischargeable.
But elevating the status of private student loans does not make sense. They should be classified the same way as other commercial loans like car loans. But lenders of such loans argue that if private student loans are subject to discharge like other private consumer debts, it would make it harder for students to get such loans. Lenders would be fearful that students would take up a loan and immediately seek bankruptcy protection upon graduation even before they get a proper job. However, most borrowers are not frauds seeking to game the system. Furthermore, there is a means test in every state that determines who can file for bankruptcy.
Although there have been some attempts to change the status of private loans and allow borrowers to be forgiven of the debt in bankruptcy, they have not been successful.
Filed under Chapter 7 (Tampa) by on May 25th, 2010. Comment.
In 2009, 372 cases of bankruptcy were filed in the Midland Division of the Western District of Texas’ US Bankruptcy Court. This figure was a rise from the 243 filed in 2008 and represented an increase of about 53%. Most of these were filed by companies under Chapter 11 bankruptcies. In a typical year, an average of 80% of bankruptcies are Chapter 11 ones. But of late, there has been also a rise in filings by individuals who file either under Chapter 7 or 13.
The rise in bankruptcies is seen as a domino effect originating from a weaker economy and falling oil prices that result in poor business performances of many companies. Especially hit were smaller companies with up to 100 employees in the oil service industry that had to implement drastic belt tightening measures including laying off workers. This naturally resulted in workers working fewer hours and eventually trying to pay their overdue bills on credit or resorting to money lending services. These desperate attempts to stay financially afloat would only exacerbate the situation and eventually many file for bankruptcy.
Despite the rise in number of bankruptcies last year, the numbers were still lower compared to before the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) came into effect in 2005. The average number of bankruptcies pre-BAPCPA was 911 a year (the highest was 1,205 cases in 2005). But after the BAPCPA took effect, the numbers have become closer to 273 a year, a reduction of about 70%.
The BAPCPA made it mandatory to attend pre-bankruptcy credit counseling and a financial management course before your debts could be discharged. But the most prominent feature of the BAPCPA is a system that makes it more difficult to obtain a Chapter 7 bankruptcy approval thus forcing people seeking bankruptcy to file under Chapter 13 instead. A Chapter 7 bankruptcy eliminates your unsecured debts like credit card and medical bills whereas a Chapter 13 bankruptcy restructures your debts such that you repay them over a period of 3 to 5 years.
But the BAPCPA is not enough on its own to reduce the number of bankruptcies if oil prices continue to plummet. Should the oil prices stabilize, it would still take 60 to 90 days before the oil companies can benefit from it and even longer for it to be felt by the workers.
Hence, there is unlikely to be a significant reduction in the number of bankruptcies filed this year at least for 6 to 9 months.
If you are contemplating filing for bankruptcy either for your company or yourself, contact our team of Tampa lawyers at (813) 200 4133 or toll free (800) 965 5074 for a free consultation.
Filed under Chapter 7 (Tampa), Tampa Bankruptcy News by on Feb 3rd, 2010. Comment.
