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More debtors file for bankruptcy 7-9-02By MIKE FUCHS, Staff Writer
News & Record The Triad economy may have gained some steam, but that hasn't stopped people from filing for bankruptcy at a record pace.
The number of filings in the U.S. Bankruptcy Court for the Middle District, which comprises Guilford, Rockingham, Randolph, Alamance, Davidson and 19 other counties, rose 5.9 percent during the first half of 2002 compared with the same time last year.
If that trend continues, the 5,624 filings through June 30 of this year could surpass the record 10,910 bankruptcy cases filed last year.
Bankruptcy experts say those filings are not surprising, particularly for an area hard-hit by textile and furniture plant closings.
"A lot of folks who had income from certain sources and had bought homes or were paying for homes lost their jobs," said James Pell, a bankruptcy lawyer in Greensboro. "Just look around to the Asheboro area to Rockingham County. Their homes are going to foreclose. I see a lot of that. Chapter 13 is literally the only way to stop that foreclosure."
Under Chapter 13, creditors may be repaid in installments, in full or in part, over a 3- to 5-year period.
More than half, or 56 percent, of the cases filed this year were Chapter 13.
"We've been through a pretty severe recession in this area," said Don Jud, a UNCG economist who produces the monthly Piedmont Triad Business Index.
The second largest portion of filings this year were Chapter 7, which allows people to keep some property exempt while the balance is sold to creditors. Forty-four percent of the filings were Chapter 7.
Dewey Whitsett, 76, a retired forklift operator at Lorillard, struggled with mounting credit card debt for three years before deciding to file under Chapter 7 on June 5.
"I had no alternative," said Whitsett, who lives in Greensboro. "My bills -- they got so high. That was the last straw."
Not everyone is sympathetic.
Joe Pomykala, an economics professor at Towson University in Maryland, blames what he described as lax bankruptcy laws that allow virtually anyone to seek protection from creditors.
"It's a form of legalized theft people are taking advantage of," Pomykala said. "As far as I'm concerned, it's a get-out-of-debt-free card."
Jim Boyett, a bankruptcy lawyer in Greensboro, sees it differently.
"It's been my experience there are thieves out there, but probably 95 percent of it has nothing to do with people being thieves," Boyett said. "It has to do with people experiencing major changes in their lives."
Some examples?
"Sickness," Boyett said. "Illness. Accident. Injury. Divorce. Babies. Old age. Downsizing. Right-sizing."
Boyett also blamed mounting credit card debt.
"Thirty years ago, people might have a Sears card or a gas card," he said. "Today, it's very common they'll have five or six credit cards. The banks and the credit card companies just send them in bushel baskets to people."
Across the country, a record 1.5 million bankruptcy filings were filed in 2001, representing a 19 percent increase compared with 2000. National figures concerning the first half of this year were not available, according to the Administrative Office of the U.S. Courts.
The Middle District saw a smaller increase: a 16 percent rise in filings in 2001, compared with 2000.
Contact Mike Fuchs at 373-7077 or mfuchs@news-record.com
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