Richmond sees a drop in bankruptcies

The rate at which Richmonders are filing for personal bankruptcy is beginning to ebb, but bankruptcy lawyers say it’s too early to toast the end of the recession.

About 500 people filed for personal bankruptcy in January, down 15 percent from January 2011.

In fact, filings will likely end the month lower than at any time last year. The slowest month last year was January, with 587 filings, and the heaviest month was March, with 902. But the numbers declined throughout the year, suggesting that fewer residents are in dire financial straits.

Not quite so fast, said Roy Terry, a bankruptcy attorney with Sands Anderson, who cautioned that there might be other factors leading to the slowdown in filings.

Terry, who said the drop in bankruptcies was on par with a national decline, said people tend to file after a major financial hit, such as a home foreclosure.

“One way to look at it is maybe the economy has finally turned the corner, and I hope that’s it,” he said. “But the rate of foreclosure has decreased, and a lot of that has to do with problems the banks are having.”

Terry was referring to political pressure on banks to slow their foreclosure processes and make sure their documentation is in order.

Terry said that the vast majority of filings he sees are connected to job loss.

Bankruptcy attorney Joe Lamb agreed that it wasn’t time to celebrate an economic turnaround.

“There are people out there who need to file and just haven’t done it yet,” he said. “I don’t understand it, but I’m not a big believer in the idea that the slowdown in filings means the economy is improving.

The rate at which Richmonders are filing for personal bankruptcy is beginning to ebb, but bankruptcy lawyers say it’s too early to toast the end of the recession.

About 500 people filed for personal bankruptcy in January, down 15 percent from January 2011.

In fact, filings will likely end the month lower than at any time last year. The slowest month last year was January, with 587 filings, and the heaviest month was March, with 902. But the numbers declined throughout the year, suggesting that fewer residents are in dire financial straits.

Not quite so fast, said Roy Terry, a bankruptcy attorney with Sands Anderson, who cautioned that there might be other factors leading to the slowdown in filings.

Terry, who said the drop in bankruptcies was on par with a national decline, said people tend to file after a major financial hit, such as a home foreclosure.

“One way to look at it is maybe the economy has finally turned the corner, and I hope that’s it,” he said. “But the rate of foreclosure has decreased, and a lot of that has to do with problems the banks are having.”

Terry was referring to political pressure on banks to slow their foreclosure processes and make sure their documentation is in order.

Terry said that the vast majority of filings he sees are connected to job loss.

Bankruptcy attorney Joe Lamb agreed that it wasn’t time to celebrate an economic turnaround.

“There are people out there who need to file and just haven’t done it yet,” he said. “I don’t understand it, but I’m not a big believer in the idea that the slowdown in filings means the economy is improving.

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Jason M. Krumbein
Jason M. Krumbein
10 years ago

My experience is that the major reason that people are not filing Bankruptcy is that they no longer have anything to protect. They have lost their job, so they have no wages to protect. They have been foreclosed, so there is no house to protect. The car has been repossessed, so there is no car to protect. The retirement account has been raided, so there is no money there to protect. In the end, Bankruptcy is about protecting what you have left, and if there is nothing, then there is no reason to protect the cardboard box you are living… Read more »