The pace of bankruptcy filings in the San Antonio area slowed in the first half of the year as fewer people sought protection from creditors.
Overall, there were 2,276 business and consumer bankruptcy petitions recorded from January through June, a 6.6 percent decline from the 2,437 filings in the same period last year, figures from the U.S. Bankruptcy Court for the Western District of Texas show.
It’s the lowest number of bankruptcies in the first six months of the year since 1,890 cases were filed in 2008.
The decline in filings compared with last year has been driven by fewer individuals turning to bankruptcy court for refuge.
There were 2,209 personal bankruptcy filings — regardless of the chapter of the U.S Bankruptcy Code — in the first half of the year. That was a 6.9 percent drop from the 2,372 filings in the same period a year ago.
About 53 percent of the cases were Chapter 13 filings, in which debtors intend to repay a portion or all of their debts to creditors.
Not all of the numbers from the San Antonio bankruptcy court were encouraging.
Thirty-three area companies went belly-up in the first half of the year, a 65 percent jump over the 20 companies that were liquidated in 2010.
The 33 Chapter 7 liquidation cases are the most recorded in the San Antonio area since at least 2005.
Meanwhile, San Antonio-area businesses seeking to reorganize under Chapter 11 dipped to 29 in the first half of the year from 35 a year ago.
San Antonio bankruptcy lawyer Jan Perry Lederer attributed the slide in personal bankruptcy filings, in part, to the slowdown in foreclosure activity.
“The banks have backed off a bit in pushing the foreclosure sales,” Lederer said. They’re offering, and looking a little bit harder at, modifications, he added.
Many consumers resorting to bankruptcy are grappling with a decrease in income, said San Antonio bankruptcy lawyer Paul Rosenbaum.
“They’ve lost their jobs (and) they’ve gotten new jobs, but the jobs that they are getting are like 70 percent of what they earned before,” Rosenbaum said. “So that 30 percent was what was servicing debt before. Even at 70 percent, they can’t meet minimum living standards.”
Other consumers filing bankruptcy have kept their jobs but seen their hours cut, Lederer said.
The decline in personal bankruptcies may be somewhat of a surprise considering the seasonally adjusted unemployment rate for the San Antonio area stood at 7.7 percent for both April and May, according to the Federal Reserve Bank of Dallas. That matches the highest rate since at least January 1990. The local unemployment rate for June hasn’t been released yet.
The drop in consumer filings in the San Antonio area corresponds with what happened at the national level in the first half of the year. Consumer filings dropped 7.9 percent according to a report issued this week by the American Bankruptcy Institute. The data was supplied by the National Bankruptcy Research Center.
“The drop in bankruptcies for the first half of the year shows the continued efforts of consumers to reduce their household debt, and the overall pullback in consumer credit,” ABI Executive Director Samuel Gerdano said in a statement.
Lederer expects the number of San Antonio-area bankruptcies for all of 2011 will be comparable to last year’s, meaning he anticipates an uptick in filings in the second half of the year that will wipe out much of the first-half decline. He predicts many consumers seeking mortgage modifications won’t be approved.
“Those folks will be running in to file (for bankruptcy) because they won’t want to lose their house,” Lederer said. So a lot of them will seek Chapter 13 to force a loan modification, he said.
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