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VOL. 127 | NO. 78 | Friday, April 20, 2012

Struggling Economy Keeps Bankruptcy Filings on Rise

By Aisling Maki

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The first quarter of 2012 showed a slight increase in bankruptcy filings in West Tennessee, according to The Daily News Online, www.memphisdailynews.com.

All chapters combined – Chapters 7, 11 and 13 – amounted to 3,063 Shelby County bankruptcies for the period from January through March, up 2.8 percent from 2,978 in Q1 2011.

The United States Bankruptcy Court, Western District of Tennessee, has offices in Memphis and Jackson. However, the data in this report include only ZIP codes within Shelby County. In effect, it examines the number of bankruptcies filed by Shelby County debtors in local bankruptcy court.

“We’re pretty much in line with what the trends are,” said Memphis bankruptcy attorney Jimmy McElroy of Jimmy McElroy & Associates. “I’ve noticed a slight increase, and that happens a lot this time of year because people use their credit cards a lot during the Christmas holidays.”

He said he also continues to see people file for bankruptcy following layoffs.

“So many people come in who’ve worked at the same place for 10 or 20 years, and all of a sudden the plant closes down or moves and they lose their job, and that forces people to take drastic measures they thought they’d never have to take,” McElroy said, adding that he always sees individuals filing for bankruptcy because of mounting medical bills.

“People always have medical issues, and they may have insurance, but it doesn’t cover all the hospitalization expenses and the high cost of medical drugs and procedures,” he said. “That doesn’t really go up and down with the economy; it’s pretty constant.”

Chapter 13 bankruptcies, or “wage-earner” cases, which involve a court-ordered debt repayment plan, increased to 2,216 in Q1, up 7.5 percent from 2,061 in Q1 2011.

“For a while a lot of the mortgage companies were not foreclosing; they were giving people the opportunity to modify their loans,” McElroy said. “But so many of these modification promises don’t come to fruition, so people come in because they’re really far behind on their payments and they get the foreclosure notice, and we immediately file the Chapter 13 to stop the foreclosure.”

February saw the highest number of Chapter 13 filings in the county with 762. January had 711 filings and March had 743.

Frayser’s 38127 ZIP code led Chapter 13 filings with 197. It was followed by Westwood’s 38109 with 191, Raleigh’s 38128 with 181, Oakhaven/Parkway Village’s 38118 with 165, and Whitehaven’s 38116 with 160.

However, Chapter 7 bankruptcies, filed by the most hard-pressed debtors who usually get to wipe away most of what they owe, fell 7.2 percent in Shelby County to 838 in Q1 from 903 in Q1 2011.

March saw the most Chapter 7 filings with 333, while February recorded 303 and January saw 202.

Southeast Shelby County’s 38125 ZIP saw the most Chapter 7 filings with 56, followed by Westwood’s 38109 with 50, Whitehaven’s 38116 and Frayser’s 38127, each with 48, and Hickory Hill North’s 38115 and Raleigh’s 38128, each with 46.

On the business side, Chapter 11, or reorganization, bankruptcy filings saw a 35.7 percent decline in Shelby County, with nine in Q1 compared to 14 in Q1 2011.

Three of those filings were in Collierville’s 38017 ZIP, while Germantown East’s 38139 had two, and Hickory Hill North’s 38115, Oakhaven/Parkway Village’s 38118, Bartlett/Brunswick’s 38133 and Bartlett’s 38134 each had one.

January and March each saw four Chapter 11 filings, while February had one.

A wide range of businesses filed for bankruptcy in Shelby County in the second quarter, including hair salons, cleaning services, daycares, pest control services, lawn care businesses and painting companies.

A tanning salon, laundry mat, collection agency, towing company and auto repair business were also among those that filed for Chapter 11 bankruptcies in West Tennessee.

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RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 32 344 10,222
MORTGAGES 52 452 13,327
FORECLOSURE NOTICES 30 106 2,644
BUILDING PERMITS 0 783 24,307
BANKRUPTCIES 60 359 9,892
BUSINESS LICENSES 23 133 3,736
UTILITY CONNECTIONS 76 595 14,558
MARRIAGE LICENSES 23 104 3,167

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