Kern bankruptcies up, but still below historic levels
| Tuesday, Oct 28 2008 08:30 PM
Last Updated Friday, Mar 27 2009 11:54 AM
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Local bankruptcy filings have more than doubled this year compared to 2007 but remain below historic levels, a Californiananalysis of court data found.
Filing pace, however, has increased for the last year or so. Local bankruptcy attorneys expect the higher numbers to continue into the new year and beyond as adjustable mortgages reset and people lose jobs.
In Kern, 1,954 bankruptcy cases have been filed so far this year, numbers through September from California’s Eastern District of the U.S. Bankruptcy Court show.
That compares to 870 filed during the first nine months of 2007.
“Our volume’s about double what it was last September,” said Bakersfield attorney Steven M. Stanley. “That’s when it really started to pick up.”
The court statistics include personal and business bankruptcies of all categories.
Figures going back to 1999 dipped steeply in 2006 after new bankruptcy laws took effect in October 2005.
From 1999 through 2005, though, bankruptcies remained relatively steady and were higher than current levels.
Average monthly filings for those years generally ranged between 310 to 350. An exception occurred in 2000, when the monthly average was about 280.
The high mark was 2002, when monthly filings averaged 364. In all, nearly 4,370 bankruptcies were filed that year.
So far in 2008, the monthly average stands at 217, though the pace of filings has been trending upward since January.
Last year, the number was 108.
In 2006, after changes to federal law, the monthly average dropped to 57. Total filings that year fell to 683.
Some observers expected 2005’s legal changes to make some bankruptcies much harder to qualify for.
But that doesn’t seem to be the case, said Stanley, the lawyer.
“It’s not as difficult as everybody first predicted when the laws passed,” he said.
Patrick Kavanagh III, a Bakersfield bankruptcy attorney, said more paperwork is required now. Files that used to be 3/4 of an inch thick now take up 3 or 4 inches.
“It makes every bankruptcy more expensive,” Kavanagh said of the changes.
The underlying triggers that cause a person to file haven’t changed much, both lawyers said.
For homeowners, Kavanagh said, the most common trigger is a foreclosure.
People who don’t own homes often go under when wages are garnished or a collection agency comes after them, he said.
Stanley said the only significant difference he’s noticed in the current economy is more folks are filing Chapter 7, or liquidation, bankruptcies.
“People aren’t trying to save homes through Chapter 13,” he said.
