Personal bankruptcy filings soar 42% locally

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By Tom Shean
The Virginian-Pilot
© August 22, 2009

Prompted by mounting job losses and cutbacks in work hours, more Hampton Roads residents are resorting to bankruptcy this year.

Through July, the number of individuals seeking to wipe out all or most of their debt through a Chapter 7 bankruptcy filing jumped 42 percent to 2,910, according to data compiled by the U.S. Bankruptcy Court. That was up from 2,049 filings in the January-through-July period last year.

Meanwhile, the number of bankruptcy filings by Hampton Roads businesses during the same period rose 23 percent because of the greater number of businesses seeking to liquidate.

While higher unemployment accounts for part of the increase in personal Chapter 7 filings, more workers in Hampton Roads are

resorting to bankruptcy because their job hours have been cut back sharply, said Thomas B. Dickenson, a Norfolk bankruptcy lawyer.

As in the past, high levels of credit-card debt and medical bills have also influenced individuals' decisions to get out from under their debts by means of a Chapter 7 bankruptcy, Dickenson and other lawyers said.

As the recession drags on, more out-of-work individuals have exhausted their savings and lack the access to credit, such as home equity lines of credit, that they once had, said Robert V. Roussos, a Norfolk bankruptcy lawyer. Roussos expressed surprise that the increase in personal bankruptcies through July wasn't higher.

The 42 percent rise in personal Chapter 7 filings for Hampton Roads was less than a nationwide increase of 47 percent for the six months ended June 30, according to the American Bankruptcy Institute, a nonpartisan group that draws on data from the Administrative Office of the U.S. Courts.

Meanwhile, the number of local residents seeking to hold on to a home or other assets by means of a Chapter 13 bankruptcy filing rose 9 percent to 1,463 through July, up from 1,344 in the same period last year. Chapter 13 allows individuals time to devise a plan to repay creditors part of what is owed over an extended period.

The number of Hampton Roads businesses seeking to liquidate by means of Chapter 7 climbed to 83 during from January to July, up 36 percent from the 61 that did so in the year-earlier period.

Rather than bearing the cost of a bankruptcy filing, some financially strapped businesses in the region are simply closing their doors and handing the keys to their landlord or the bank, Roussos said.

The number of businesses attempting to restructure their debt under the court protection of a Chapter 11 bankruptcy fell by 38 percent to 13. However, that figure might understate the number of distressed businesses wrestling with heavy debts.

Many are negotiating with creditors outside the court system to save time and money, said David Greer, a Norfolk bankruptcy lawyer.

Tom Shean, (757) 446-2379, tom.shean@pilotonline.com

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So .. Beach Mayor wants to raise taxes to spend $95K on junk

Submitted by Reid_Greenmun on Sat, 08/22/2009 at 6:43 pm.

Wow ... clearly the new Mayor of Virginia Beach and his friends are out of touch with the reality of their constituents! What Beach home owners needs is tax relief, not another borrow & spend spending spree. The Mayor and other City Council members need to scrap their $95M wish list, forego ANY spending related to light rail until the SEIS and Alternatives Analysis is completed and the citizens vote on the proposed LPA, suspend any more "investment" of tax funds in Town Center, and let the oceanfront business owners spend their own money instead of millions in tax funds to pay for fancy "gateways" and more "amenities" to attract tourists. City Council needs to focus on intelligent ways to reduce spending and reduce city staffing. Times are very hard right now and we have had many years of massive property tax hikes we need to repeal over time.

Economics don't lie

Submitted by GettingItRight on Sat, 08/22/2009 at 1:25 pm.

Economics, and the associated rules that determine supply, demand, interest rates, money supply, growth, recession, etc do NOT lie. Manipulating these variable artificially, like BO-Reid-Pelosi are trying their best to do, will come back to haunt the US economy. The markets will correct themselves - that' the way markets work.

When you push $700B in "bailout" money into the market followed by $787B in "stimulus" funds, the market is going to react. We're seeing the results of that now, and watch for the economy to continue to decline until it overcomes the coming currency infusion - think Carter-era inflation on a scale about ten times the early to mid 70s. There is no other way for the markets to come back into harmony unless BO suddenly pulls about 4x the number of US businesses and population out of his backside in the next 12 to 24 months. It's fundamentally impossible for what the Dems are doing to work the way they say it will.

A 42% rise in bankruptcies is just the beginning, the tip of the iceberg as some would say. If you're not prepared for the coming economic collapse (real estate declines, business failures, job losses, currency devaluation and eventual coll

In Theory...

Submitted by trouble00 on Sat, 08/22/2009 at 6:51 pm.

What you state makes sense, but in reality things to not always go the way theories say they should. The economy BO inherited tanked due to a collapse in the nation's financial market, not due to the usual causes of recessions (non financial market related)such as the last one in 2000-2001 that had its roots in the over inflation of stock value in the hi-tech/dot-com markets which subsequently needed to be burst. The recovery period however is now infamous as a "jobless" recovery that was coupled with stagnant wages, exploding living costs (housing, healthcare, education, etc), and the loss of higher paying jobs (manufacturing & hi-tech)for lower paying service jobs. All those ingredients made for a bitter stew that will take years to recover from. With the middle class having less money, losing jobs, and no credit left the main source of economic spending is stunted so companies lay off even more which means even less spending. It is a viscious cycle that only can be stopped with infusion of $$ and the govt was the only source to go to.

But there hasn't been a

Submitted by Ethan on Sat, 08/22/2009 at 11:47 pm.

But there hasn't been a recovery. The stock market is reflective of the money given to the banks being invested in the stock market. I expect we will see the little guys trying to ride the tide get wiped out.

The gov't wants to bring back the housing/credit mania. Our debt is outrunning out productiveness so far.

Just seems like the country is headed to crash, and I'd say it deserves it.

Approval

Submitted by david.putney (staffer) on Sat, 08/22/2009 at 3:37 pm.

I posted this on another comment of yours, but we are not staffed during the days on Saturday. Approval is delayed. David M. Putney, PilotOnline.com producer.

hope you pay

Submitted by 2cents on Sat, 08/22/2009 at 1:07 pm.

I really hope the Pilot pays their censor's well. They sure are efficient when it comes to protecting their view point from dissent.

how low will we go

Submitted by mturner23462 on Sat, 08/22/2009 at 9:54 am.

I bought a house in 1997 and lived in it until I sold it in 2007. Original buy price was $60K, Sell price was $160K (got out right as prices started to fall). That means my house apreciated 260% in ten years. That is flat rediculous (not so much I did not take the cash and run)The apreciation should have been around 5% per year (in a good year) meaning the vaule of my house, when I sold it, should have been around $90K. It probably should have been closer to $80k. In the current market that house is probably still valued at $120K.

this means a couple things. the people who bought the house are upside down on that house by $40K, they are stuck there for at least 15 years. The other thing is, the value of that house has to slide another $40K until it meets the vaule it should be at , at which point they will be $80K upside down on that mortage.

So my prediction, and the smart money, is that house values locally will drop at LEAST another 33% over the coming two years. It will be probably be closer to the range of 50% since so many people are now locked into house that they cannot get out of unless they declare backruptcy that demand is going to be very very slow coming back.

Yes the new owners should

Submitted by Ethan on Sat, 08/22/2009 at 11:51 pm.

Yes the new owners should just walk away from it. Buying a house is a legal contract. The legal contract says that you may return the house if you can't pay it.

You made out, selling it to a greater fool. If you didn't buy a new house, and are renting, then chances are you are good and have cash in the bank. Greater fool defaults, then us taxpayers seem to be covering the loss.

Take note potential buyers, you are the greater fool in this guy's story.

Let's all give a big Hoorah to George W. Bush!

Submitted by jwb on Sat, 08/22/2009 at 9:04 am.

Hello, Mr. asleep at the wheel, Mr. bogus war, congradulations Bush for being the worst disaster to the US in decades. It will be a long time cleaning up your mess. Obviously you have a lot of friends out there.