Phoenix-area bankruptcies tumble to 2-year low

Phoenix-area bankruptcies in February tumbled to a two-year low, a fresh sign that the local economy is healing.

The 1,819 filings last month, which were down nearly 12 percent from February 2010, also marked the first year-over-year improvement since October 2006.

Since hitting a post-recessionary peak of 3,063 last March, filings have eased in 10 of the past 11 months.


The bankruptcy improvement coincides with a drop in the Arizona and national unemployment rates and a steady decline in consumer credit-card debt.

"The level of consumer debt is a key barometer," said Joe Volin, a Mesa bankruptcy attorney. "If you lose your job but don't have much debt, you have more staying power to ride it out."

Volin said he has noticed a modest drop in the number of people contacting him for bankruptcy-filing assistance.

Credit-card balances have been trending lower for most of the past two years, primarily because banks have been writing off bad debts or having it removed through bankruptcy proceedings.

This week, CardHub.com reported that credit-card debt fell by $67 billion in 2010, to $809 billion, with defaults accounting for $75 billion of that number. Borrowers added $8 billion in net new debt for the year, it said.

Mike Sullivan, director of education at Take Charge America, a Phoenix-based debt-counseling firm, said he has noticed a leveling off in the number of individuals seeking help.

"There seem to be fewer desperate people," he said. "Many have adjusted and are finding new ways to get by."

The bankruptcy-filing downtrend also is apparent outside metro Phoenix.

Arizona reported 2,440 filings in February, down 10 percent from a year earlier and the lowest tally since statewide filings peaked in March 2010 at 4,135.

Chapter 7 proceedings, which provide a fresh financial start after non-exempt assets are sold to pay creditors, accounted for more than 80 percent of total filings, both in the Valley and for Arizona.

Nationally, the 102,686 consumer filings in February represented a drop of 8 percent from February 2010, the American Bankruptcy Institute reported, using numbers from the National Bankruptcy Research Center.

The U.S. tally was up 11 percent from January. For the Valley, however, February filings were down 8 percent from January.

by Russ Wiles The Arizona Republic Mar. 10, 2011 12:00 AM





Phoenix-area bankruptcies tumble to 2-year low