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Hoosier bankruptcy filings among highest

Michael W. Hoskins
January 1, 2008
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Bankruptcy filings have increased so much in Indiana that some U.S. trustees handling Chapter 7 proceedings may want to add an extra session each month to hear new cases.

Attorneys statewide are seeing more clients from an uptick in filings, and as a result are not surprised to hear that federal filings across the country surged 38 percent in 2007. Nor are they surprised that Indiana ranked fourth highest in the nation overall and top in the country for the number of Chapter 7 filings last year.

"It doesn't surprise me that numbers are up," said Fort Wayne bankruptcy attorney Edward Craig. "Indiana isn't the best place to practice (bankruptcy) law in the world, but in terms of need there's no better place. This is still a lucrative practice."

Figures released Tuesday from the Administrative Office of the U.S. Courts show federal bankruptcy filings surged 38 percent last year, a significant jump following a year that saw sharp declines after the Bankruptcy Abuse Prevention and Consumer Prevention Act took effect in October 2005.

A historic high came in 2005 prior to the federal law, when more than 2 million bankruptcies were filed. Overall filings fell sharply in 2006 to about 617,580 but started climbing again last year, reaching 850,912 filings, figures show. Chapter 7 filings increased 44 percent, from 360,890 to 519,364 filings; Chapter 13 filings increased 29 percent, from 251,179 to 324,773 filings. The Chapter 11 filings jumped 23 percent while the Chapter 12 filings rose by less than 1 percent, figures show.

Tennessee, Georgia, and Alabama ranked first through third in total Chapter 7 and Chapter 13 bankruptcy filings, respectively. In Indiana, the Northern District Bankruptcy Court saw a surge greater than the national average while the Southern District closely mirrored what was happening nationally. The Northern District filings increased from 8,279 in 2006 to 11,764 last year; the Southern District jumped from 13,955 to 19,358 in 2007.

About 8,583 filings in the Northern District represented Chapter 7 bankruptcies, while 12,846 were in that category in the Southern District, the figures show.

In Indianapolis, bankruptcy attorney Jim Young with Rubin & Levin said his colleagues are not surprised by the increase in filings.

"We've been speculating as to when it would start picking up, and this shows that's happening," he said. "Normally, the Indianapolis panel (of trustees) would have two days a month when they'd hear new cases, but starting in May they are starting a third session. That's a consistent indication of how much the bankruptcy caseload is picking up for the trustees."

Young said that Indiana's economy, as in other states seeing similar high bankruptcy filings, is a main reason for the increase.

The current level of bankruptcy filings is probably close to where it should be, or is at least getting to that point, said Craig.

"You have to go pre-scare, not just pre-2005," he said. "That goes before 2001 or maybe even before the rumblings of bankruptcy reform in the late 1990s. Numbers now are close to that (2000) level, and 2008 is promising to turn out to be comparable."
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  1. Frankly, it is tragic that you are even considering going to an expensive, unaccredited "law school." It is extremely difficult to get a job with a degree from a real school. If you are going to make the investment of time, money, and tears into law school, it should not be to a place that won't actually enable you to practice law when you graduate.

  2. As a lawyer who grew up in Fort Wayne (but went to a real law school), it is not that hard to find a mentor in the legal community without your school's assistance. One does not need to pay tens of thousands of dollars to go to an unaccredited legal diploma mill to get a mentor. Having a mentor means precisely nothing if you cannot get a job upon graduation, and considering that the legal job market is utterly terrible, these students from Indiana Tech are going to be adrift after graduation.

  3. 700,000 to 800,000 Americans are arrested for marijuana possession each year in the US. Do we need a new justice center if we decriminalize marijuana by having the City Council enact a $100 fine for marijuana possession and have the money go towards road repair?

  4. I am sorry to hear this.

  5. I tried a case in Judge Barker's court many years ago and I recall it vividly as a highlight of my career. I don't get in federal court very often but found myself back there again last Summer. We had both aged a bit but I must say she was just as I had remembered her. Authoritative, organized and yes, human ...with a good sense of humor. I also appreciated that even though we were dealing with difficult criminal cases, she treated my clients with dignity and understanding. My clients certainly respected her. Thanks for this nice article. Congratulations to Judge Barker for reaching another milestone in a remarkable career.

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