Bankruptcy filings fell 14 percent in Ohio last year, dropping to their lowest point since 2006.
There were 50,641 personal and business bankruptcies last year, compared with 58,846 the previous year, according to new data available from the two U.S. Bankruptcy Court districts in the state.
Experts attributed the decline to a variety of factors, including mortgage lenders holding off foreclosure proceedings, creditors waiting to pounce until there are assets to grab and people becoming “uncollectible” as they hit financial bottom.
“With nothing to protect, you don’t have a need to file,” said Jeffrey Morris, a University of Dayton law professor and a member of the National Bankruptcy Conference.
There might be another reason, he said: People perhaps are more cautious with their finances now because of so much media publicity surrounding the struggling economy.
It also has become more difficult to obtain financing to start a business.
“If you can’t open a new business, you can’t get into financial trouble,” said Marc Gertz, a Chapter 7 trustee in Akron.
The court district statistics do not distinguish between personal and business filings. The breakdown included:
• 38,606 Chapter 7 filings
• 11,929 Chapter 13 filings
• 96 Chapter 11 filings.
Chapter 11 cases typically involve businesses.
The Toledo region led the state with a 17 percent one-year decline. Filings in the Akron region — Summit, Portage and Medina counties — dropped 14 percent, while the Canton region fell 16 percent. The Canton region encompasses Stark, Wayne and six other counties.
The Columbus region topped the state with 11,331 bankruptcies. The Akron and Canton regions had 4,125 and 3,517, respectively.
One troubling trend: Some parents who guaranteed their children’s college loans are filing for bankruptcy more often because their kids can’t find jobs to pay off their debt.
“There’s so much student loan debt and there’s so little you can do about it within the confines of the bankruptcy court,” Gertz said.
Hundreds of thousands of people nationwide are saddled with student loan debt, said Keith Rucinski, a Chapter 13 trustee in Akron.
“It’s sad,” he added about parents being forced to declare bankruptcy. “You should be at a time in your life when you should be enjoying yourself.”
Some experts predict a swell of bankruptcy filings is coming.
“Attorneys are gearing up and thinking there will be a flood of cases this coming year,” Rucinski said.
There are a few theories for that as well. When the economy picks up and people have assets to seize and wages to garnishee, that’s when mortgage lenders and other creditors move in and people file.
The country also saw a record number of people file for Chapter 7 protection in 2005, right before bankruptcy regulations stiffened. Those people were barred from filing for at least eight years.
Gertz and Rucinski said they expect some of those people — there were 135,888 who filed in Ohio — to seek protection again this year.
Rick Armon can be reached at 330-996-3569 or firstname.lastname@example.org.