Metro Phoenix bankruptcy filings are stable but still abundant

The economy might be recovering, but it's not happening fast enough for thousands of Arizonans.

Plagued by high debt, sparse job prospects and slumping real-estate prices, a record number of people throughout metro Phoenix and the state filed for bankruptcy protection last year - eclipsing even the spike in filings that coincided with changes to the law in 2005.

And while filing numbers have started to stabilize at elevated levels, experts are cautioning against any quick improvements.

"We're finding it's not letting up," said Walter E. "Pete" Moak of the Moak Law Firm in Chandler. "Incomes have gone down and interest rates on credit cards have gone up, so you can pretty much tell which way we're heading."

A record 31,207 households and businesses filed for bankruptcy protection in metro Phoenix last year, surpassing the high mark of 28,277 in 2005, when changes to the law made it less favorable to file, reported the U.S. Bankruptcy Court in Phoenix. The 2010 tally included another 2,358 filings in December.

Statewide, the 41,579 bankruptcies in 2010 topped the prior record of 39,204. The new record included 3,057 Arizona filings in December.

The problems afflicting consumer finances have continued to persist well after the recession's official end.

Moak said he still sees a lot of people struggling with credit-card debt, often relying on their cards to meet living expenses but eventually hitting their limits.

Job losses and lower incomes are other problems that can make it difficult to dig out of a hole.

"I see a lot of people who are distressed who don't know what else to do," said Valeri A. James, a consultant and consumer advocate at Simple Solutions Credit Consulting/Training in Gilbert. "They think they must either pay it off or file for bankruptcy because that's what they hear on TV."

Alternatives to filing, she said, include bargaining to lower the principal amount of a debt, negotiating for reduced interest rates, enlisting the help of credit-counseling services and perhaps borrowing from family members.

Despite the records set in 2010, the recent trend has been one of stabilization, albeit at high levels.

Valley filings actually have dropped in eight of the past nine months since hitting a recent peak of 3,063 in March.

The December total was up just 1 percent from December 2009 - the smallest year-over-year increase since before the recession began.

A moderating trend also has been apparent on the national scene.

Consumer bankruptcies rose 9 percent in 2010 to 1.53 million, reported the American Bankruptcy Institute and the National Bankruptcy Research Center. But that was below the 1.6 million filings the institute had predicted. The December tally of 118,146 filings was up 3 percent from November and 4 percent from December 2009.

by Russ Wiles The Arizona Republic Jan. 12, 2011 12:00 AM





Metro Phoenix bankruptcy filings are stable but still abundant