Bankruptcy filings rise for 3rd month in a row

United States Bankruptcy Office at the Federal Courthouse in Toledo, Ohio.

THE BLADE/LORI KING
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The West-facing side of the U.S. District Courthouse, located at 1716 Spielbusch Ave. in downtown Toledo is pictured.

After seven years of declines, bankruptcies in northwest Ohio appear to be on the rise.

Cases filed in U.S. Bankruptcy Court in Toledo rose 14 percent in July, the third consecutive month of increases and the second straight month with a double-digit increase.

Bankruptcies increased in four of the seven months this year. They rose in just four of the 12 months in 2016. The filings cover Toledo and 21 counties in the region.

“Something had to give. Consumer debt was rising, the default rate was rising, and people are starting to spend more because they’re feeling more confident in their jobs,” said Toledo bankruptcy attorney Elliot Feit.

The last year local bankruptcies rose was 2009. They went up 26 percent over the previous year. Since then, they have been down 5, 19, 17, 8, 12, 11, and 4 percent in successive years. In 2017, filings are up 1 percent compared with the first seven months last year.

In July, 326 cases were filed compared with 280 a year ago. Chapter 7 liquidation cases are down 1 percent but Chapter 13 repayment cases are up 18 percent.

In January, Mr. Feit’s bankruptcy practice partner, Gordon Barry, said subprime loans for cars were rising rapidly and some subprime credit cards were being issued again. Overall debt was on the rise, too.

Mr. Feit said credit cards aren’t a problem yet but car loans are.

“People are getting cars but there are horrible terms on the loans,” he said. Fees and loan terms are leaving some with monthly payments of $700 or more, Mr. Feit said.

Debt from medical bills also is becoming a problem, he added.

Attorney Thom Cafferty said that, since May, his office is seeing “three to four times the number of people we were seeing in the first quarter of this calendar year.” He attributes the increase to an improved economy — which is leading to more spending and bankruptcy troubles for some.

“When they were out of work, they had nothing to lose and they didn’t need us,” Mr. Cafferty said. “Bankruptcy is not an option when you have nothing to protect.”

But if someone’s income increases, debts can lead to wage garnishment. “Once you lose 25 percent of your net pay, you start paying attention,” Mr. Cafferty said.

Contact Jon Chavez at jchavez@theblade.com or 419-724-6128.