Valley-area bankruptcies begin to slow

Valley residents continue to struggle with debt, but not at the torrid pace of earlier this year.
Metro Phoenix logged 2,658 bankruptcy filings in October, down from 2,819 in September and up just 6.5 percent from October 2009, according to figures supplied by the U.S. Bankruptcy Court in Phoenix.
That year-over-year increase for October was the smallest for any month so far in 2010.

As in prior months, Chapter 7 filings, which allow debtors a fresh financial start after their non-exempt assets are sold to pay creditors, accounted for about four in five Phoenix-area filings. Chapter 13 debt-repayment plans accounted for most of the rest.
Joe Volin, a bankruptcy attorney in Mesa, said he had noticed more people struggling with credit-card debt lately after seeing their interest rates bumped up from perhaps 6 to 12 percent to something in the range of 25 percent or higher.
"Increases like that often make it impossible to make even the minimum payments," he said.
The credit-card-reform legislation that took effect this year doesn't prohibit rate hikes but does place certain restrictions on increases and requires that issuers provide advance notice and clear disclosures.
Volin also said he had noticed people seeking bankruptcy protection after losing their home in a foreclosure or short sale. Many of these homeowners also had taken out home-equity loans on their properties and are being pursued on that debt, prompting an interest in a bankruptcy filing, he said.
Bankruptcies also are slowing nationally.
The 132,173 consumer bankruptcy filings for October were up just 1.4 percent from September and down 2.8 percent from October 2009, reported the American Bankruptcy Institute and National Bankruptcy Research Center.
Filings for all of Arizona came to 3,557 in October, down from 3,766 in September but up from 3,342 one year earlier.
The state remains on track to exceed 40,000 bankruptcies this year, compared with 33,960 for all of 2009.

by Russ Wiles The Arizona Republic Nov. 6, 2010 12:00 AM



Valley-area bankruptcies begin to slow