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VOL. 116 | NO. 144 | Friday, July 26, 2002

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2nd quarter bankruptcies decrease

Second quarter bankruptcies down slightly


The Daily News

While the number of bankruptcy petitions filed in the first half of this year surpassed those filed last year, second quarter 2002 bankruptcy filings decreased slightly from first quarter numbers.

According to data released by the U.S. Bankruptcy Court for the Western District of Tennessee, there were 6,644 bankruptcy petitions filed in the second quarter, down from 6,945 filed in the first quarter, a 4 percent decrease.

Its good news but its hard to know whether a one quarter change is any trend, said U.S. Bankruptcy Court Judge William Houston Brown.

Especially in light of large companies filing bankruptcy, such as WorldCom, its difficult to determine what the economic ramifications for individuals might be.

I still wonder, are we at the bottom? Brown said.

Or, are we seeing an improvement in personal bankruptcies, which is most of our filings.

Bankruptcy Court Chief Judge David S. Kennedy agreed a look at quarterly numbers couldnt establish a definite trend.

Its too early to tell, but I think its worthy of continued monitoring, Kennedy said.

But, it looks to me like we are still having the traditional causes for filings.

The primary reasons people file for bankruptcy here are due to domestic, medical and job-related problems.

Year-to-date numbers showed 13,589 bankruptcy petitions filed by June 30, compared to 12,614 filed last year through June, a 7 percent increase.

As usual in the Western District, Chapter 13 bankruptcies outpaced all other types. There were 4,578 Chapter 13 (wage-earner cases) bankruptcies filed during the second quarter compared to 2,037 Chapter 7 (liquidation) bankruptcies, while there were 29 Chapter 11 (reorganization) bankruptcies and no Chapter 12 (farm-debt adjustments filings).

The district court also released information about bankruptcy program indicators showing how local numbers compared to nationwide numbers.

In the 12-month period ended March 31, 27,283 bankruptcy cases were filed in the Western District, while the national median for filings was 14,230. A majority of the local filings were Chapter 13 19,556 compared to the national median of 3,096.

Weve been sort of very far up almost at the top of the districts in the country as far as filings per household and of course our 13 filings put us at the very top of the list nationwide, Brown said.

According to the list, the Western District of Tennessee ranked No. 2 in the nation for the highest number of Chapter 13 filings, and ranked No. 15 overall.

Typically, about 75 percent of debtors who file for bankruptcy in the Western District file Chapter 13, while nationally about 70 percent file under Chapter 7.

In about 98 percent of those Chapter 7 cases, the unsecured creditors receive no payments at all, Kennedy said.

In Chapter 13 cases, the individual repays at least some of the debt.

But, in the Western District of Tennessee, the two standing Chapter 13 trustees in Memphis and the one in Jackson, Tenn., dispersed more than $200,000 million last calendar year under Chapter 13 plans, Kennedy said.

I think to some extent the congressional policy favoring Chapter 13 over Chapter 7 is being fostered in this district, Kennedy said.

The entire state of bankruptcy law could change in the future depending on the movement of proposed bankruptcy legislation.

A new bill, which would make it more difficult to file for bankruptcy, continues to be debated in Congress. The bankruptcy reform act was introduced years ago and is currently being delayed by an attached amendment, which includes language on abortion clinic violence.

PROPERTY SALES 69 357 17,741
MORTGAGES 66 403 20,438
BUILDING PERMITS 208 696 36,641
BANKRUPTCIES 52 210 11,374