Second-Quarter Bankruptcies Up 2.3 Percent

By Jennifer Johnson Backer

The second quarter of 2013 showed a slight boost in West Tennessee bankruptcy filings as consumers who couldn’t pay off debt accumulated in late 2012 filed for bankruptcy.

All chapters combined – Chapters 7, 11 and 13 – climbed to 3,164 Shelby County bankruptcies for the three-month period ended June 30, up 2.3 percent from 3,093 bankruptcies filed during the same three-month period in 2012, according to The Daily News Online,


Overall, April had the most filings with 1,100, followed by 1,045 in June and 1,019 in May. Year to date through June 30, bankruptcy filings for all chapters combined climbed to 6,195, compared with 6,156 during the same six-month period last year.

Spencer Clift, a shareholder and attorney with Baker, Donelson, Bearman, Caldwell & Berkowitz PC in Memphis, said it’s common to see a slight bump in bankruptcy filings at the end of the second quarter. That’s because credit card debt accumulated in late 2012 during the holiday season must be paid or liquidated to judgment. Tax refunds also only stretch so far, he said.

“More foreclosures are set and advanced to a conclusion in the first and second quarters of the year,” Clift said. “Combine all these factors with unexpected medical bills, a job loss, reduced hours by an employer, or a divorce, and the inevitable result is an increase in bankruptcy filings.”

The U.S. Bankruptcy Court for the Western District of Tennessee has offices in Memphis and Jackson. But the data in this report include only ZIP codes within Shelby County. The data measure the number of bankruptcies filed by Shelby County debtors in local bankruptcy court.

Chapter 13 bankruptcies, which involve a court-ordered debt repayment plan, were little changed and totaled 2,362 in the second quarter, up less than 1 percent from 2,351 a year earlier. June saw the highest number of Chapter 13 filings in the county with 792, while April had 789 filings, and May had 781.

For the six-month period ended June 30, Chapter 13 bankruptcy filings dropped to 4,523, compared with 4,567 during the same period last year.

Funtime Learning Center in Cordova, Right on Time Cleaning in Memphis, and A Simple Servant Girl in Memphis were among the businesses that filed for Chapter 13 bankruptcy in the second quarter.

Chapter 7 bankruptcies, typically filed by the most hard-pressed debtors, climbed 8.9 percent to 798 during the three-month period, compared to 733 during the same year-earlier period. April saw the most Chapter 7 filings with 311, while June recorded 250, and May saw 237.

Year to date, filings for Chapter 7 bankruptcies climbed to 1,653, compared with 1,571 during the same period last year.

Mike Whitley Plumbing in Memphis, Meyers Tutoring Service in Cordova and All Star Hot Wings LLC in Memphis were among the businesses that filed for Chapter 7 bankruptcy in the second quarter.

“While the number of consumer bankruptcies is up slightly, it is positive that the cases filed under Chapter 13, where debtors are attempting to repay their creditors, continues to greatly outnumber those cases filed under Chapter 7, which provide little or no payment to creditors,” said Frank Childress, a shareholder with Baker, Donelson, Bearman, Caldwell & Berkowitz PC.

Childress said Memphis and the state of Tennessee is one of the few jurisdictions where Chapter 13 filings exceed Chapter 7 liquidation cases.

Chapter 11, or reorganization bankruptcy filings, fell to four in the second quarter, compared with nine a year earlier.

For the year-to-date period ended June 30, filings for Chapter 11 bankruptcies climbed to 19, compared with 18 during the same period last year.

Mr. G’s Grape & Grain Fine Wines and Spirits Inc. in Germantown and Collierville Business Center were among the businesses that filed for Chapter 11 bankruptcy.