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VOL. 129 | NO. 76 | Friday, April 18, 2014

First-Quarter Bankruptcies Remain Flat

By Bill Dries

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Bankruptcies in Shelby County were almost the same in number for the first three months of 2014 as they were for the first quarter of 2013.

First quarter bankruptcies that were filed in the U.S. Bankruptcy Court for the Western District of Tennessee, located inside One Memphis Place, remained flat compared to the same period last year.

(Daily News File/Andrew J. Breig)

There were 3,036 bankruptcies filed in the U.S. Bankruptcy Court for the Western District of Tennessee in the first quarter, a slight increase from the 3,031 filed during the first quarter of 2013, according to The Daily News Online, www.memphisdailynews.com.

The same three ZIP codes covering Frayser, Raleigh and Westwood, in that order, were at the top of the list in terms of bankruptcies filed during both periods.

The total for the three areas was 761 bankruptcy filings or 25 percent of the total for all of Shelby County.

For the quarter a year ago, 855 of the 3,031 filings or 28 percent came from the three ZIPs with Frayser at the top followed by Westwood and Raleigh.

There were 2,253 Chapter 13 filings during the first quarter of 2014, accounting for 74.2 percent of all filings. Chapter 13, which involves court-ordered repayment plans, is consistently the largest category of bankruptcy filings.

The 774 Chapter 7 filings accounted for 25 percent of the quarter’s total and compare to 855 Chapter 7 filings in 2013’s first quarter. Chapter 7 bankruptcies are those in which the assets of a debtor are liquidated or sold off.

There were nine chapter 11 filings for the three-month period compared to 15 over the same period in 2013. Chapter 11 filings involve a reorganization plan that allows the entity to remain in operation.

With the first quarter numbers in, the Memphis nonprofit that works to build financial literacy marked another date on the calendar – the day after the federal tax filing deadline – with a fundraiser.

Efforts by the Memphis RISE Foundation – Responsibility, Initiative, Solutions, Empowerment – include counseling on bankruptcy as well as tax problems and generally helping Memphians not only survive economic problems but begin to build wealth.

RISE president and CEO Linda Williams said filing for bankruptcy is always a decision to be weighed carefully and as a last resort.

“As our economy goes up and down and the loss of jobs, that’s a major issue along with medical bills that causes a person to seek bankruptcy,” she said. “Obviously when someone loses a job and they don’t know the options and alternatives available to them, they are seeing all the signs where people are saying we will do your bankruptcy case for you. They don’t understand the long-term implications. In all of the programs that we have, we say, ‘Don’t think of bankruptcy, call us first.’”

Frayser, Raleigh and Westwood are areas hit hard in the recession starting with the foreclosure crisis that kicked off the national economic downturn. But Williams said RISE sees people from across the county in financial trouble with no one area more than another.

“People in low-income neighborhoods – they pay more for what they need. The amount of money they pay getting their checks cashed. That’s why we stress looking at traditional banking programs,” she said. “Your money is insured. When you look at the monthly cost of doing business, it’s much lower than you paying for money orders or other kinds of fees. … When they add it up, they see they are losing out.”

Williams said RISE clients may continue to experience ups and downs including job loss and high medical bills. But she adds that 85 percent of them continue to save money as part of a plan to deal with such unexpected events.

“If you’re doing a listing of all of your income and all of your expenses and looking at how you are going to meet those expenses on the front end before you get any money, then you are going to be a lot better off than someone who has never sat down and tried to manage,” Williams said. “Savings are critical for emergencies.”

PROPERTY SALES 41 308 2,265
MORTGAGES 47 379 2,607
BUILDING PERMITS 128 1,018 6,068
BANKRUPTCIES 53 255 1,787