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VOL. 129 | NO. 12 | Friday, January 17, 2014

Shelby County Bankruptcy Filings Flat in 2013

By Bill Dries

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Bankruptcies in Shelby County stayed below 13,000 in 2013 with a slight increase over 2012 and 2011, as tracked by The Daily News Online, www.memphisdailynews.com.

The 12,660 bankruptcies filed during the year compares to 12,471 in 2012, a 1.5 percent increase, and 12,414 in 2011, a 2 percent increase.

As in those two previous years, most of the bankruptcies filed in the Shelby County ZIP codes in U.S. Bankruptcy Court for the Western District of Tennessee were Chapter 13 bankruptcies, which involve court-ordered repayment plans.

The 9,675 Chapter 13 filings accounted for 76 percent of all filings for the year, which is consistently the case in Shelby County.

There were 2,956 Chapter 7 filings, cases in which the assets of debtors are liquidated or sold off. And the remaining 29 filings were Chapter 11 cases in which debtors reorganize their debt.

Frayser’s 38127 ZIP code topped the 2013 list for all bankruptcy filings with 1,072. The same area also topped the 2012 list with 1,011.

Westwood’s 38109 ZIP code was second in Shelby County with 1,055 filings, also finishing where it did in the 2012 year-end figures. In 2012, Westwood showed 971 bankruptcy filings.

The 38118 ZIP code, which is the Oakhaven/Parkway Village area, was third with 910 bankruptcy filings. The same ZIP code topped the year-end bankruptcy numbers for 2011 with 990, followed that year by the Frayser and Raleigh ZIP codes in that order.

CLIFT

Spencer Clift, a shareholder at Baker, Donelson, Bearman, Caldwell and Berkowitz PC, said the numbers show a “steady consistency.”

What the numbers don’t show, and what Clift believes bears further analysis, is how many of the Chapter 13 filings were repeat filers who filed after a prior case was dismissed.

It is an important factor in the state-by-state numbers that measure bankruptcy filings per capita. That is an indication not only of repeat filers in Chapter 13 but a better comparison of the activity among states that vary in population.

Fourth-Quarter Bankruptcy Numbers Steady

Bankruptcy filings in Shelby County for the last three months of 2013 mirrored the trends in the bankruptcy numbers for the whole year.

There were 3,185 bankruptcy filings for the fourth quarter of 2013, compared with 3,144 in the last three months of 2012, a 1.3 percent increase, and 3,227 in the fourth quarter of 2011, a 1.4 percent decrease.

As in full-year numbers, Chapter 13 filings were the dominant category, with the 2,550 Chapter 13 bankruptcies accounting for 80 percent of total filings. Another 628 of the cases were Chapter 7, and seven were Chapter 11 cases.

Frayser’s 38127 ZIP code was the top ZIP for the quarter, with 264 filings, followed by Westwood’s 38109, with 260 filings, and Raleigh’s 38128, with 251.

Frayser’s 38127 was the top ZIP code in the fourth quarter of 2012 as well, with 254 filings. It was the second-highest ZIP in the last three months of 2011, with 249 filings, when Westwood’s 38109 topped the quarterly totals at 286.

Chandler Reports is a division of The Daily News Publishing Co. Inc.

By the per capita standard of filings per 1,000 population, Tennessee had the highest filing rate of any state as of June 30, 2013.

The 6.59 filings per 1,000 people for Tennessee was nearly double the national average of 3.33.

But Clift countered that the higher per capita numbers are balanced by disbursements to creditors that are among the highest in the country for a federal bankruptcy court jurisdiction.

Clift, whose practice involves bankruptcy and general commercial litigation, has represented financial institutions as they seek to recover and restructure commercial loans.

Other attorneys focused primarily on bankruptcies have commented that the steady numbers across all categories are probably not a barometer of economic conditions. They could be an indicator that the relationship between debtors and creditors is working itself out outside the court process and without the costs associated with the legal process.

Linda Williams, president and CEO of the nonprofit RISE Memphis, said the steady numbers point to bad decisions by debtors who should view bankruptcy as a last resort.

“Often it is thought of as the first option,” she said.

The purpose of RISE is to offer financial literacy programs and counseling specifically to entry-level wage earners on budgeting, saving and accumulating wealth.

“We encourage them not to claim bankruptcy. We help them on the front end to look at other alternatives,” Williams said of strategies to develop spending plans or talk directly with creditors. “Even if you have a hospital bill, there are people within these organizations who will make payment arrangements.”

RISE’s own recent study of the Memphis area shows medical bills and overdue student loans are leading causes for filing bankruptcy. So is having some kind of financial emergency that could be as basic as a car repair and not having a nest egg to handle such unexpected expenses.

“It’s when you stick your head in the sand and you do absolutely nothing that you get in trouble,” she said. “A perfect example is when students graduate from college and they’ve got those loans. It’s usually a problem when they make no arrangements at all. They just think it will disappear.”

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RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 63 269 16,682
MORTGAGES 85 313 21,745
FORECLOSURE NOTICES 0 56 4,322
BUILDING PERMITS 0 209 39,587
BANKRUPTCIES 65 287 15,829
BUSINESS LICENSES 16 67 5,558
UTILITY CONNECTIONS 126 413 23,986
MARRIAGE LICENSES 22 94 5,129

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