Despite the challenges of slow employment growth and a less-than-booming real-estate market, Phoenix-area bankruptcies dropped for the third month in a row with 2,434 filings in June, reports The Arizona Republic.
Compared to 2010, Phoenix bankruptcy numbers in 2011 have demonstrated an improvement across the board.
The first half of 2011 produced 14,271 individual and business filings, representing a 7 percent drop from the number of filings produced during the first half of last year. The amount of filings from last month alone marked an 8 percent decline from June 2010.
The trend in Phoenix bankruptcy follows the rest of the state, as filings were down 9 percent in June and nearly 8 percent lower in the first half of the year compared to 2010. In addition, filings across the United States also fell 8 percent in the first half of 2011 compared with last year.
Chapter 7 filings represent the largest percentage of all Valley bankruptcies, increasing from 77 percent at the beginning of the year to its current level of 86 percent, most likely because debtors generally prefer filing for Chapter 7 according to The Republic.
In a Chapter 7 bankruptcy proceeding, both individuals and businesses can get rid of any unsecured debts, such as money owed on a credit card, after non-exempt assets are sold to pay most secured debts against them. However, they must make under a certain amount, among other requirements, to qualify.
In contrast, Chapter 13 bankruptcies, in which debtors with a regular income set up a repayment plan with the court, have fallen 24 percent compared to the number of filings in June of last year.
James Portman Webster, a bankruptcy attorney in Mesa, told The Republic that job losses have likely made it easier for debtors to qualify for Chapter 7.
Although the decline in bankruptcy filings may be taken as a heartening change, experts warn that it may not be the hoped-for sign of a strengthened economy, citing the possibility that everyone who needed and could afford to file has already done so.
"Most of the people who were going to get fired, already got fired," said Webster.
- Find a Phoenix Bankruptcy Attorney (FindLaw)
- Bankruptcy Filings Fall in Phoenix (Phoenix Business Journal)
- Bankruptcy Definition: What Exactly Is It? (FindLaw)
- Chapter 7 vs. Chapter 13 Bankruptcy (FindLaw)
- Arizona, Construction Still Struggling under Job Losses (Phoenix Bankruptcy Law Blog)