Bankruptcy filings up 25% over last year
0 Comments | Patriot Ledger, The; Quincy, Mass., Jul 23, 2010 | by Jon Chesto
BOSTON – The number of bankruptcy filings in Massachusetts surged by 25 percent in the first six months of the year, as many consumers struggled with job losses, changing credit card terms and foreclosures.
The Warren Group reported Thursday that through June 30, 11,847 filers statewide sought protection through Chapter 7, Chapter 11 or Chapter 13 of the federal bankruptcy code.
That figure, which includes businesses and individuals, represents a 25.2 percent increase from the same January-June period in 2009. The sharp rise could put the state on track to surpass the rush of bankruptcies in 2005, before strict limits took effect.
“It’s telling the story that people are absolutely at their wit’s end,” said Vincent Valvo, group publisher for the Boston-based Warren Group’s real estate and financial publications. “It also tells the story of how overextended folks got.”
The most common bankruptcy filing is Chapter 7, which can completely erase many kinds of loans. The number of Chapter 7 filings in the state rose to 9,142 in the first six months of 2010, up 17.6 percent from the same period in 2009.
But the use of Chapter 13 rose dramatically, with 2,586 Chapter 13 filings in the first half of the year, up 62 percent from the same time in 2009. Chapter 13 filings can be used to work out payment plans to prevent foreclosures.
Winchester lawyer Nina Parker said many of her clients come to her office after lenders fail to offer permanent loan modifications to keep borrowers in their homes.
“People are feeling defeated,” said Parker, co-chairwoman of the Boston Bar Association’s bankruptcy section. “They do everything they can to comply with the (loan modification) programs, but the lenders don’t follow through.”
Richard Gottlieb, a bankruptcy lawyer in Boston, said high unemployment – the state’s jobless rate has been at 9 percent or above since September – has made it tough for many people to make ends meet. Many dual-income households struggle when one of the wage- earners lose a job unexpectedly.
“I’ve never seen it this bad,” Gottlieb said. “I’ve never seen this level of misery
