Personal, business bankruptcy filings in Valley up 77%

Russ Wiles
The Arizona Republic
Jun. 12, 2008 12:00 AM

A weak job market, housing woes and other financial stresses took a toll last month, as 999 Valley residents and firms filed for bankruptcy - a 77 percent jump from 563 in May 2007.

Still, the latest figures showed modest improvement from April, when 1,104 consumers and businesses sought protection from creditors, according to the U.S. Bankruptcy Court in Phoenix.

"I'm seeing people filing to stop a foreclosure or modify the debt on their homes," said Diane L. Drain, a Phoenix bankruptcy attorney.

A bankruptcy filing can be used to remove a second lien for homeowners with two loans on a property, said Drain, who also cited job losses and big medical bills among the other catalysts driving up bankruptcy filings.

"We don't expect it to slow down anytime soon," she said.

For all of Arizona, 1,419 individuals and businesses filed in bankruptcy court last month, up 66 percent from 853 filings in May 2007 but down from 1,552 in April.

Chapter 7 filings, which essentially offer a fresh financial start, accounted for more than three-fourths of filings in metropolitan Phoenix and statewide. Chapter 13 filings, which create repayment plans for debtors with regular income, accounted for most of the rest.

So far this year, 4,593 consumers and businesses have filed for bankruptcy protection in the Valley, an 82 percent jump compared with 2,528 over the first five months of 2007.

The statewide total of 6,426 filings year to date represents a 73 percent increase compared with 3,724 for the January-May stretch of 2007.

The American Bankruptcy Institute is predicting more than 1 million consumer filings for the nation this year.

May filings of 91,214 were up nearly 31 percent from May 2007 but down 1 percent from April.