host posted on January 09, 2012 14:44
By Patrick Danner, pdanner@express-news.net
Here's another sign that South-Central Texas might be on the path of an economic recovery: Consumer bankruptcy filings fell about 10 percent in 2011.
There were 4,387 consumer bankruptcy filings last year, almost 500 fewer than the 4,880 filings recorded in 2010, figures from the U.S. Bankruptcy Court for the Western District of Texas in San Antonio show.
It's the fewest number of personal bankruptcy cases filed since 2008, when the country was in the midst of the Great Recession. Bankruptcies are considered by many to be a lagging economic indicator.
Business bankruptcies in South-Central Texas tumbled 13.7 percent last year to 101 from 117 in 2010. The U.S. Bankruptcy Court's San Antonio division is comprised of Bexar and 20 other counties that extend west to Terrell and south to Dimmit.
Bankruptcy lawyers attributed the drop in consumer filings to a decline in the number of foreclosure postings in 2011, which declined about 10.8 percent from 2010.
Many debtors facing foreclosure seek Chapter 13 bankruptcy protection, which allows them to reorganize their debts and keep their houses.
For several months last year, however, lenders purposely slowed down the foreclosure process following accusations that they didn't have standing to foreclose because of sloppy paperwork.
“We can see a spike (in bankruptcy activity) depending on what the mortgage companies are doing,” said J. Todd Malaise, a San Antonio bankruptcy lawyer. “It seems like they go through their waves where they will aggressively foreclose one month and then the next they won't. So you can always tell when they're being aggressive.”
Malaise added that about 90 percent of the debtors he's met bought their homes between 2005 and 2008, when the credit markets were especially loose. He speculated that many of the people who bought during that timeframe and later had trouble making their mortgage payments already have lost their houses to foreclosure.
Bankruptcy lawyer Rick Flume sees debtors who are struggling not only with debt but with a loss of pay, so they're in a house they can no longer afford. In those circumstances, he said, bankruptcy isn't going to help them because they have to continue making house payments.
“They don't have enough for their housing,” Flume said. “They need the money for those more basic living expenses, such as gas for the car, insurance for the car, food.
“If you want to keep your stuff, you have to keep paying for your stuff,” he added.
Last year marked the second straight year that personal bankruptcy filings declined, though the drop from 2009 to 2010 was less than 2 percent.
Changes in the bankruptcy laws in 2005 were designed to steer more people into Chapter 13, where they would enter into repayment plans, rather than Chapter 7, where they can liquidate assets to pay some debts while being released from other debts.
Yet the number of people filing for Chapter 7 liquidation has remained a steady percentage of overall consumer filings in the San Antonio area. Figures show that 43.7 percent of consumer filings were Chapter 7 cases last year, the fourth straight year they've been in the 43 percent to 44 percent range.
Express-News archives contributed to this report.
Read more: http://www.mysanantonio.com/business/article/Bankruptcy-filings-are-down-10-2439003.php#ixzz1izZzCcBA