Bankruptcy filings rose in August

Valley residents may have taken a vacation from their debt problems earlier this summer, but the respite didn't last.

The number of Phoenix-area bankruptcies jumped in August to 2,865 from 2,585 in July, ending a four-month downtrend, the U.S. Bankruptcy Court in Arizona reported. Valley bankruptcies now are on pace to exceed 30,000 for the full year, compared with slightly more than 25,000 in 2009.

Although consumers seem to be doing a better job managing credit-card debts - as indicated by a recent Federal Reserve report showing such debts have dropped to a five-year low - the sluggish economy and dismal job market continue to pressure many people to reorganize or discharge their debts.

"I don't know who's saying the recession is over, but we're not seeing it," said Mark Winsor, a bankruptcy attorney at Winsor Law Group in Mesa. "I can't see how all these bankruptcies, foreclosures and short sales will wrap up within a year."

Chapter 7 bankruptcies continue to represent the lion's share - more than four in five local filings. They offer a fresh financial start after the non-exempt assets of debtors are sold to pay creditors. But Chapter 13 debt-repayment plans are growing faster and hit a yearly high of 490 in August.

Winsor said he's noticed a trend of more filings by retailers, auto shops and other businesses that cater to a largely Hispanic clientele. He attributed that to fallout from Arizona's tough stance on illegal immigration.

In addition, he feels some larger banks have become less willing to negotiate terms on problem loans, persuading some debtors to seek bankruptcy-court relief.

Statewide bankruptcy filings hit 3,769 in August, ending a four-month streak of declines. The state tally is on pace to top 40,000 for 2010.

Filing pressures are relatively intense in Arizona, which might reflect the state's prolonged real-estate downturn. Nationally, bankruptcies in August actually fell 8 percent from July and were up just 6 percent from August 2009, according to the American Bankruptcy Institute and National Bankruptcy Research Center.

By comparison, the Valley's filing total was up nearly 23 percent from a year earlier, and the state tally increased 22 percent.

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



Bankruptcy filings rose in August