Story URL: http://news.medill.northwestern.edu/chicago/news.aspx?id=140761
Story Retrieval Date: 3/15/2014 8:59:21 AM CST
Chicago bankruptcy filings increased 38 percent in September from a year earlier. There is no sign of decline.
“I can only predict there’s more to come,” said Kenneth Gardner, clerk of the Northern District of Illinois Bankruptcy Court.
In September 4,302 cases were filed, compared with 3,121 a year earlier and only 1,884 cases in September 2007. Last month's Chapter 11 filings, mostly used by corporations seeking to reorganize while protected from creditors, increased the most. There were 34 Chapter 11 filings in September 2009 compared with 14 in September 2008.
This jump could be attributed to the increasing number of individuals forced to utilize Chapter 11 bankruptcy because of their high income or large debt, a result of the 2005 amendments to the Bankruptcy Code. “I think this is going to continue until the recession runs its course,” said Chicago bankruptcy attorney Jay Fortier.
Chapter 13 filings by wage-earners, however, decreased to 992 in September from 1,052 in September 2008. In Chapter 7, liquidation, 3,152 cases were filed last month, compared with 2,055 a year earlier.
Bankruptcy filings peaked in 2005, in anticipation of the tighter restrictions on bankruptcy enacted that year. After a sharp decline in 2006, filings have increased each year at an annual rate of about 40 percent.
Kara Krystavel, public service team trainer at the Chicago Bankruptcy Court, said that on the last day of September alone, 481 new cases were filed.
Paul Bach, a bankruptcy attorney in Chicago, said there’s no simple answer for why there is an increase in bankruptcy filings, but he agreed with Gardner's comment that bankruptcy filings won’t decrease anytime soon.