Recently I was interviewed by Inyoung Hwang from Northwestern University’s Medill graduate journalism school regarding the recent increases in bankruptcy filings and the economy. Here is the article.
Bankruptcy filings soar in Chicago
by Inyoung Hwang
Dec 05, 2008
Amid a severe economic crisis and a credit squeeze leaving people with fewer options, bankruptcy filings in Chicago soared in October and increased significantly for the first 10 months of 2008, reflecting a broad national trend.
Total personal and business bankruptcy filings at the U.S. Bankruptcy Court for the Northern District of Illinois surged 39.6 percent in October to 3,483 from 2,495 a year ago. Filings jumped 65.7 percent in September to 3,121 from 1,884 a year ago. The figures were reported in the bankruptcy court’s most recent statistical release.
In all of 2007 the Northern District filings totaled 24,619, a figure already surpassed in 2008 with the 10-month count at 29,771.
“In a large metropolis like Chicago, people normally come in because of consumer debt, but with the layoffs and pay cuts this year, it’s been the bottom line for people for many reasons,” said Terrance Leeders, a bankruptcy attorney with Leeders & Associates Ltd., in Chicago. “The mortgage market is another cause, because people got in over their heads with properties that they can’t afford now.”
According to national statistics compiled by Automated Access to Court Electronic Records, a bankruptcy data company based in Oklahoma City, the number of personal bankruptcy filings in the U.S. totaled 108,813 in October, a figure greater than 100,000 for the first time since the enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act, signed by President George W. Bush in 2005, which made the filing process more difficult and expensive.
In November, the national figure dipped slightly to 91,355 filings, but Mike Bickford, president of AACER, noted that November was the shortest month of the year, with only 18 official filing dates but just 17 in most districts, since many courts were closed the Friday after Thanksgiving.
Nationwide, the average number of filings per filing day increased to 5,075 for the 18 filing days in November, compared with 4,946 daily filings in the 22 filings days in October. The Bankruptcy Court for the Northern District of Illinois has not yet released the November figures for Chicago.
“Since the changes in the bankruptcy laws in 2005, the numbers have been ramping up each year,” Leeders noted. The distressed housing market and the huge layoffs seen on the national level have hit Chicago’s economy as well, bringing an influx of clients to Leeders’ office, he said.
Chapter 7 filings, or filings by individuals and companies liquidating their assets in order to get a fresh start, increased to 2,360 in October, compared with 2,101 filings in September and 1,472 filings in the year-ago period.
Leeders said the number of bankruptcy filings tends to rise at the end of the year, as people’s expenses hike up, holiday bills trickle in and tax returns loom.
Chapter 11 filings, or filings by companies trying to reorganize their businesses to stay afloat, remained flat in October compared with the same period last year. But the total number of filings in 2008 so far is at 138, already on the verge of surpassing last year’s total of 142 filings.