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Tuesday, December 16, 2008
Courts - More on: Bankruptcy filings up over last year
Updating the ILB entry from yesterday afternoon, Lesley Stedman Weidenbener of the Louisville Courier Journal reports today:
Bankruptcy filings nationally increased by more than 30 percent in the past year, and rates in Kentucky and Indiana were among the highest in the country.Medical costs, foreclosures, rising unemployment and the loss of high-paying manufacturing jobs are to blame for the climbing numbers locally and nationally, economists and bankruptcy attorneys said. * * *
Nationally, bankruptcy filings totaled more than one million for the 12 months ending Sept. 30. That's nearly 3.4 filings per 1,000 residents and compares to just over 800,000 filings in fiscal year 2007, according to data released yesterday by the Administrative Office of the U.S. Courts.
Indiana ranked fifth in the country, with nearly 5.9 filings per 1,000 residents. That's the 12th straight year Indiana has been among the Top 10 in per-capita filings.
Kentucky ranked seventh per capita, with nearly 4.8 filings per 1,000 residents -- worse than its rating as ninth in 2007.
Gary Baxter, an economist with Baxter Capital Management in Indianapolis, said Indiana has traditionally had higher foreclosure and bankruptcy rates in part because the state has higher homeownership numbers. That includes Hoosiers moving from renting into homes they couldn't afford, a phenomenon that increased as banks and mortgage companies loosened their loan standards.
Now, with companies cutting back on jobs and overtime, many families can no longer afford to pay their bills or mortgages, he said. * * *
Lloyd Koehler, a bankruptcy attorney in New Albany, Ind., said his business volume has increased significantly. But the prime reason for bankruptcies -- medical bills -- hasn't changed much in recent years, he said.
"You can have a job but a health problem could cause you not to be able to be employed," Koehler said. "Then you're faced with uninsured medical claims plus a loss of income. It's difficult to stabilize your overall finances." * * *
Shannon Fauver, a bankruptcy attorney in Louisville, said many of her clients are couples or families that built their lifestyles based on income from two jobs.
"People were doing fine until one of them got laid off and then they can't make it anymore," Fauver said.
Her practice has focused largely on middle- and lower-income workers, people who are paid largely by the hour. But more recently, she's seen higher income individuals, including doctors and lawyers, seeking bankruptcy protection.
"Most people think that bankruptcy happens when someone is overextended because of credit card bills," she said. "But most of my clients come in because of medical bills or the loss of a job. They may have had a variable-rate mortgage where the rate picked up and they can't afford it."
Posted by Marcia Oddi on December 16, 2008 08:48 AM
Posted to Courts in general