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VOL. 128 | NO. 204 | Friday, October 18, 2013

Shelby County Bankruptcies Rise 3.4 Percent in Third Quarter

By Bill Dries

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Bankruptcies in Shelby County were up by about 100, or 3.4 percent, in the third quarter of 2013 from the third quarter of 2012, with a continuing consistency among the top three ZIP codes.

A total of 3,280 filings – encompassing Chapter 7, 11 and 13 bankruptcies – were filed in the three-month period ended Sept. 30, according to The Daily News Online, www.memphisdailynews.com. That compares to 3,171 for the same quarter in 2012.

The third-quarter numbers represent an interim period after the second-quarter bump in filings from holiday season credit card debt. The period also comes before the fourth quarter holiday season, in which consumers will incur new debt for the same reason.

The data in the report include only Shelby County ZIP codes, although the U.S. Bankruptcy Court for the Western District of Tennessee has offices in Memphis and Jackson and the court’s jurisdiction covers all of West Tennessee.

The ZIP codes with the highest number of bankruptcies filed in the third quarter include Frayser’s 38127, with 270; Westwood’s 38109, with 264; and Raleigh’s 38128, with 255.

The 38118 ZIP code, which covers Oakhaven and Parkway Village, was fourth, with 245 bankruptcies for the quarter.

The Parkway Village area is an economically distressed area that once included the Mall of Memphis and thrived with retail activity for a time until retailers – particularly big-box stores – continued to move farther east.

The 38118 ZIP code posted 245 bankruptcies for the quarter, up 15.6 percent from 212 in third quarter 2012. It was the biggest increase by number among Shelby County’s 32 ZIP codes.

The Westwood ZIP code 38109 showed 264 bankruptcies, an 8.6 percent gain from a year ago and nearly even with what it was in the third quarter of 2011.

In what is a phenomenon unique to Tennessee, Chapter 13 bankruptcies – which involve a court-ordered debt repayment plan – remained the dominant category among Shelby County filings. The 2,602 Chapter 13 cases for the quarter accounted for 79 percent of total bankruptcy filings. And the third-quarter Chapter 13 filings were up slightly compared with the 2,483 Chapter 13 cases filed for the same quarter a year ago – a 0.7 percent increase.

Chapter 7 bankruptcies – involving the most hard-pressed debtors, whose assets are liquidated or sold off – stood at 675 for the quarter, compared with 683 in the third quarter of last year. Chapter 7 filings are usually the dominant category in other states.

There were three Chapter 11 reorganizations for the third quarter compared to five a year ago.

Attorney Steven N. Douglass of the law firm Harris Shelton Hanover Walsh PLLC has seen what is normally the lowest category of bankruptcies drop recently.

“I think the primary reason is that a lot of entities are trying to do out-of-court workouts,” he said. “The bankruptcy process itself can be expensive, and it’s just not affordable right now in a lot of instances.”

But Douglass cautioned that is not necessarily a sign that the worst is over. It also doesn’t indicate all of the relationship between debtors and creditors who may be reaching their own terms out of court.

“The economy has the same impact on the commercial and the consumer area. In the consumer area, we still have the unemployment and people living paycheck to paycheck and sudden expenses that cause them to file bankruptcy,” Douglass said. “And you still have just marginal businesses out there that are trying to make it and use whatever resources they have to reorganize.”

For the first nine months of 2013, bankruptcy filings across all categories in Shelby County totaled 9,475, up 1.6 percent from the 9,327 at this time last year.

Frayser’s 38127 ZIP code, Westwood’s 38109 and Raleigh’s 38128 were the top three areas respectively for the total number of bankruptcy cases over that nine months. And each of the three ZIP codes showed an increase in filings. The same three ZIP codes have been the busiest in terms of bankruptcy filings for the previous two years as well.

PROPERTY SALES 27 150 2,415
MORTGAGES 57 228 2,835
BUILDING PERMITS 157 441 6,509
BANKRUPTCIES 61 133 1,920