Bankruptcy filings in Valley hit all-time record

Metro Phoenix bankruptcy filings have hit an all-time record this year, with another month of filings still to go.

The filings, a major indicator of economic stress, reflect the dual effects of the housing and financial meltdowns on the Arizona economy.

Still, there are signs the worst could be over. For example, bankruptcies both for metro Phoenix and the state have dropped in seven of the past eight months.

Another 2,501 consumer and business filings logged in November pushed the year-to-date total for metro Phoenix to 28,849, according to the U.S. Bankruptcy Court in Phoenix. That exceeds the 28,277 filings recorded for all of 2005, when thousands of people rushed to seek protection before a tightening in the federal bankruptcy laws took effect.

This year's total through November also tops the 25,104 filings for all of 2009.

"My guess is that 2011 will be equal or greater for filings than 2010, but it's just a gut feeling," said Diane L. Drain, a Phoenix bankruptcy attorney.

"I've noticed more folks filing who are in higher income brackets than in the past, and over the last couple months I've seen an increase in filing among people living on fixed incomes and retirees," she said.

Arizona recorded another 3,272 bankruptcy filings in November, bringing the statewide total to 38,522. That's slightly below the full-year total of 39,204 for 2005, but a new state record almost certainly will be set when December figures are released next month.

Chapter 7 filings, which provide debtors with a fresh start after non-exempt assets are sold to pay creditors, accounted for roughly four in five metro Phoenix bankruptcies last month.

Filings are easing in the state and U.S. The 114,587 U.S. consumer filings recorded in November marked a drop of 13 percent from October, although they were up 2 percent from November 2009, reported the American Bankruptcy Institute.

"The drop in consumer filings from October is perhaps a positive step that the deleveraging of the U.S. consumer may be under way, after years of expanding consumer debt," said the ABI's executive director, Samuel J. Gerdano, in a statement.

Credit bureau TransUnion recently announced that mortgage and credit-card delinquencies for Arizona and the nation likely peaked in the fourth quarter of 2009. The company expects the statewide past-due totals to decline sharply when full-year 2010 results are finalized, with further improvement next year.

by Russ Wiles The Arizona Republic Dec. 19, 2010 12:00 AM





Bankruptcy filings in Valley hit all-time record