Confirming recent trends, a new analysis shows that the U.S. Bankruptcy Court for the Middle District of Florida, which handles cases for Orlando, Jacksonville, Fort Myers, Tampa and surrounding areas, had the second-largest number of bankruptcy filings in the nation last year. The numbers included Chapter 7, Chapter 11 and Chapter 13 bankruptcies. The district with the highest number was the Eastern District of California, which includes greater Los Angeles.
There were a total of 66,861 bankruptcies filed in the Middle District of Florida last fiscal year, compared to 138,585 in California’s Eastern District. When you compare population sizes, however, the filing rates are virtually the same: About one in every 100 people filed for bankruptcy in 2010 in both districts.
Chapter 7 Filings Still Far Outstrip Chapter 13 in Central Florida
According to Middle District records, 74.8 percent of those filing for personal bankruptcy in 2010 opted for Chapter 7, despite the 2005 bankruptcy law, which attempted to make it harder for people to qualify for the Chapter, which wipes out all qualifying debts. Only 25 percent filed for Chapter 13, which involves setting up a three- to five-year payment plan.
The good news is that overall consumer bankruptcy rates in the fourth fiscal quarter (ending in September) were down about 4.75 percent in the Middle District. Chapter 7 filings were down about 4.99 percent while Chapter 13 filings were down by only 3.91 percent. The minute shift toward Chapter 13 could mean that slightly fewer filers were financially desperate.
Unemployment and the real estate market collapse are generally thought to explain the record increase in bankruptcy filings.
“People feel wealthy when they have equity in their home. When that equity evaporated, people said they’d never pay off their credit cards. That shock was what caused a lot of people to do it,” one Jacksonville bankruptcy lawyer explained to the Florida Times-Union.
Source: Florida Times-Union, “First Coast No. 2 in country for filing bankruptcy,” Kevin Turner, January 12, 2011