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Bankruptcy filings down in 2011

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Throughout Indiana, bankruptcy filings fell last year as compared to 2010 – filings in the Indianapolis area fell 17 percent last year, more than in the nation as a whole – but attorneys don’t see an improving economy in those figures.

They say the decline was driven more by stalled foreclosure proceedings.

“The drop in mortgage foreclosures and sales definitely impacted filings,” said John Petr, an attorney at Kroger Gardis & Regas and a Chapter 7 trustee for the U.S. Bankruptcy Court for the Southern District of Indiana. “That deadline to stay in the home wasn’t there.”

There were 22,754 cases filed in the Southern District in 2011, compared with 27,394 the prior year. The district encompasses the southern two-thirds of the state and has offices in Terre Haute, New Albany and Indianapolis, where most of the cases were filed.

The caseload dipped below the 2008 level but remained higher than 2007, the last year before the recession, when 18,733 cases were filed.

It appears the number of filings has also declined in the northern part of the state. Through November 2011, 14,483 cases were filed in the Northern District of Indiana – which has divisions in Fort Wayne, Hammond and South Bend. In 2010, the Northern District had 18,286 case filings, according to its website. December figures weren’t available from the Northern District as of IL deadline.

Nationwide, bankruptcy filings declined 12 percent, to 1.38 million, the American Bankruptcy Institute in Alexandria, Va., reported.
bankruptcy
Banks halted foreclosures last year after they were caught processing earlier cases illegally – the so-called “robo-signing” controversy. The still-depressed housing market is an added incentive for banks to hold off on foreclosures, instead of adding more vacant houses to their portfolios.

Attorneys said they expect filings to rise this year, as banks start to push through foreclosures again.

“The pipeline of cases I have is probably bigger than it’s ever been,” Noblesville-based bankruptcy attorney Jonathan Brown said.

Mark Zuckerberg, who has the largest personal bankruptcy practice in Indiana, thinks attorneys will begin to see consumers who walked away from houses that are worth less than the outstanding debt. Even after selling an “underwater” house, banks want to collect the difference from someone, Zuckerberg said.

He thinks many Hoosiers are avoiding bankruptcy because they’ve given up hope. With no jobs or savings, they see no assets worth protecting when creditors come knocking.

“You ever heard the phrase, ‘You can’t get blood from a turnip?’” Zuckerberg said. “A lot of these people are turnips, and there’s nothing that can be done to them.”

Another factor in the decline is a reduction in household debt, said Samuel Gerdano, executive director of the American Bankruptcy Institute. He said consumers are spending less and have less access to credit.

The most common form of bankruptcy filing is Chapter 7, which is used by both consumers and business owners to erase debt and start fresh, followed by Chapter 13, in which a debtor sets up a repayment plan.

Large businesses typically reorganize under Chapter 11.

Nationally, business filings fell further than consumer filings, the American Bankruptcy Institute said. Using data provided by Epiq Systems Inc., ABI reported a 19-percent decline in business filings, which included both Chapter 11 and Chapter 7, versus an 11-percent drop for consumers.

Data from the Southern District of Indiana showed a similar trend. There were 84 Chapter 11 filings last year, down 26 percent from 115 in 2010. In 2010, the Northern District reported 64 Chapter 11 filings; through November 2011, there were just 30.

Henry Efroymson, chairman of the bankruptcy practice group at Ice Miller, said many of his business clients are beginning to see better times after suffering since 2007.

Another factor, he said, is, “There is a lot of forbearance activity going on,” as lenders hope they’ll be repaid once the economy improves.

Jim Carlberg, chairman of the Bankruptcy and Creditors’ Rights Group at Bose McKinney & Evans, doesn’t think the economy is improving fast enough to help most businesses.

After three years of dealing with commercial real estate, he expects to see other types of businesses in court this year.

“I think it could run the gamut of retail, manufacturing, distribution, everything other than real estate,” Carlberg said.

Many small businesses that were vulnerable to the recession succumbed to Chapter 7 in 2009 or 2010, which partly explains the decline last year, Petr said.

Even in a thriving economy, bankruptcy is a steady practice because the “big three” — divorce, medical bills and unemployment — never disappear, said Brown, the Noblesville bankruptcy attorney.

Medical bills were what tripped up a McCordsville couple Brown represented at a creditors’ hearing this month. Though the couple, who did not want to be named, had a pension, medical benefits and part-time jobs, they underwent surgeries with huge out-of-pocket expenses.

The problem compounded because they paid the bills with high-interest credit cards, the husband said. “We’ve always paid the minimum amount. We just got into a rut.”•

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This story originally ran in the Jan. 16-22, 2012, issue of Indianapolis Business Journal.
 

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  1. Have been seeing this wonderful physician for a few years and was one of his patients who told him about what we were being told at CVS. Multiple ones. This was a witch hunt and they shold be ashamed of how patients were treated. Most of all, CVS should be ashamed for what they put this physician through. So thankful he fought back. His office is no "pill mill'. He does drug testing multiple times a year and sees patients a minimum of four times a year.

  2. Brian W, I fear I have not been sufficiently entertaining to bring you back. Here is a real laugh track that just might do it. When one is grabbed by the scruff of his worldview and made to choose between his Confession and his profession ... it is a not a hard choice, given the Confession affects eternity. But then comes the hardship in this world. Imagine how often I hear taunts like yours ... "what, you could not even pass character and fitness after they let you sit and pass their bar exam ... dude, there must really be something wrong with you!" Even one of the Bishop's foremost courtiers said that, when explaining why the RCC refused to stand with me. You want entertaining? How about watching your personal economy crash while you have a wife and five kids to clothe and feed. And you can't because you cannot work, because those demanding you cast off your Confession to be allowed into "their" profession have all the control. And you know that they are wrong, dead wrong, and that even the professional code itself allows your Faithful stand, to wit: "A lawyer may refuse to comply with an obligation imposed by law upon a good faith belief that no valid obligation exists. The provisions of Rule 1.2(d) concerning a good faith challenge to the validity, scope, meaning or application of the law apply to challenges of legal regulation of the practice of law." YET YOU ARE A NONPERSON before the BLE, and will not be heard on your rights or their duties to the law -- you are under tyranny, not law. And so they win in this world, you lose, and you lose even your belief in the rule of law, and demoralization joins poverty, and very troubling thoughts impeaching self worth rush in to fill the void where your career once lived. Thoughts you did not think possible. You find yourself a failure ... in your profession, in your support of your family, in the mirror. And there is little to keep hope alive, because tyranny rules so firmly and none, not the church, not the NGO's, none truly give a damn. Not even a new court, who pay such lip service to justice and ancient role models. You want entertainment? Well if you are on the side of the courtiers running the system that has crushed me, as I suspect you are, then Orwell must be a real riot: "There will be no curiosity, no enjoyment of the process of life. All competing pleasures will be destroyed. But always — do not forget this, Winston — always there will be the intoxication of power, constantly increasing and constantly growing subtler. Always, at every moment, there will be the thrill of victory, the sensation of trampling on an enemy who is helpless. If you want a picture of the future, imagine a boot stamping on a human face — forever." I never thought they would win, I always thought that at the end of the day the rule of law would prevail. Yes, the rule of man's law. Instead power prevailed, so many rules broken by the system to break me. It took years, but, finally, the end that Dr Bowman predicted is upon me, the end that she advised the BLE to take to break me. Ironically, that is the one thing in her far left of center report that the BLE (after stamping, in red ink, on Jan 22) is uninterested in, as that the BLE and ADA office that used the federal statute as a sword now refuses to even dialogue on her dire prediction as to my fate. "C'est la vie" Entertaining enough for you, status quo defender?

  3. Low energy. Next!

  4. Had William Pryor made such provocative statements as a candidate for the Indiana bar he could have been blackballed as I have documented elsewhere on this ezine. That would have solved this huuuge problem for the Left and abortion industry the good old boy (and even girl) Indiana way. Note that Diane Sykes could have made a huuge difference, but she chose to look away like most all jurists who should certainly recognize a blatantly unconstitutional system when filed on their docket. See footnotes 1 & 2 here: http://caselaw.findlaw.com/us-7th-circuit/1592921.html Sykes and Kanne could have applied a well established exception to Rooker Feldman, but instead seemingly decided that was not available to conservative whistleblowers, it would seem. Just a loss and two nice footnotes to numb the pain. A few short years later Sykes ruled the very opposite on the RF question, just as she had ruled the very opposite on RF a few short years before. Indy and the abortion industry wanted me on the ground ... they got it. Thank God Alabama is not so corrupted! MAGA!!!

  5. OK, take notice. Those wondering just how corrupt the Indiana system is can see the picture in this post. Attorney Donald James did not criticize any judges, he merely, it would seem, caused some clients to file against him and then ignored his own defense. James thus disrespected the system via ignoring all and was also ordered to reimburse the commission $525.88 for the costs of prosecuting the first case against him. Yes, nearly $526 for all the costs, the state having proved it all. Ouch, right? Now consider whistleblower and constitutionalist and citizen journalist Paul Ogden who criticized a judge, defended himself in such a professional fashion as to have half the case against him thrown out by the ISC and was then handed a career ending $10,000 bill as "half the costs" of the state crucifying him. http://www.theindianalawyer.com/ogden-quitting-law-citing-high-disciplinary-fine/PARAMS/article/35323 THE TAKEAWAY MESSAGE for any who have ears to hear ... resist Star Chamber and pay with your career ... welcome to the Indiana system of (cough) justice.

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