Bankruptcy filings skyrocket

bankruptcycourtA record number of people are filing for personal bankruptcy in the United States Bankruptcy Court for the Eastern District of Virginia, which is housed in Richmond.

In January, 619 entities (including households and businesses) filed some form of bankruptcy. That’s up from 251 in January 2008, or 145 percent.

In February, 755 entities filed. That’s up 172 percent. And March is looking to be up 160 percent, with 487 filings this month.

Those numbers are far worse than the 30 percent increase reported in September, indicating that local job losses and credit restrictions are punishing families that did not set aside funds for a rainy day.

Roy Terry,
a bankruptcy attorney at Durrette Bradshaw and a trustee for the bankruptcy court, said his trustee schedule is twice as busy as it was a few months ago. He said individuals declaring bankruptcy are often facing stiff credit card bills. One filer had $300,000 in credit card debt, he said. Most of those who are filing have $20,000 or $30,000 in credit card debt.

“On average, a lot of people are two or three months away from filing for bankruptcy” when they lose a job, Terry said.

Some of those filing where formerly employed at large firms, including Qimonda and Circuit City, Terry said.

“Richmond has traditionally lagged behind the rest of the country, but with the loss of big employers, some of that protection, that shield, has gone away, and there is more impact here,” he said.

He added that the rate of bankruptcy filings lags the economy, meaning the rate will likely stay high until companies begin hiring again. Nobody knows when that will happen.

The rate at which businesses file bankruptcy is harder to determine, because some small businesses might fold, leading their owners to declare personal bankruptcy. However, in the first three months of this year, there have been seven companies that have filed for Chapter 11 bankruptcy reorganization, including S&K Menswear, King William Sand & Gravel Mattaponi, the Mattress King, the Greenbrier Hotel, and Warren & Associates.

There were none in the same period last year.

Aaron Kremer is the BizSense Editor. Please send story ideas to [email protected]

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Bankruptcy filings skyrocket | Richmond BizSense
12 years ago

[…] Bankruptcy filings skyrocket | Richmond BizSense […]

Samuel K. Coggin
Samuel K. Coggin
12 years ago

“punishing families that did not set aside funds for a rainy day” is an unfair characterization. Three hospitalizations and no health insurance would exhaust most people’s ‘rainy day funds.’ Please be a little more sympathetic to those who must take such a drastic step (their FICO scores are ruined).