Chattanooga bankruptcy filings
The number of cases filed in U.S. Bankruptcy Court in Chattanooga 1.8 percent last year but were still 29.2 percent below the peak reached a decade ago
2018 - 6,011
2017 - 5,904
2016 - 5,689
2015 - 5,747
2014 - 5,882
2013 - 6,515
2012 - 6,640
2011 - 7,273
2010 - 7,357
2009 - 8,487
Source: Chattanooga division of the U.S. Bankruptcy Court for Eastern Tennessee
Top bankruptcy states
States with the highest per capita filing rate (total filings per 1,000 population) in 2018 were:
1. Alabama (5.63)
2. Tennessee (5.38)
3. Georgia (4.57)
4. Mississippi (4.25)
5. Illinois (3.66)
U.S. average was 2.43 filing per 1,000 residents.
Source: Epiq Systems Inc., American Bankruptcy Institute
Despite a dip in bankruptcy filings nationwide, the number of Chattanoogans going broke rose last year for the second consecutive year and remained double the U.S. average.
Bankruptcy filings at the federal court in Chattanooga rose 1.8 percent last year to 6,011 cases. Although that was down nearly 30 percent from the depths of the Great Recession a decade ago, local bankruptcy filings still have grown in each of the past two years even though filings nationwide continue to decline.
Alabama, Tennessee and Georgia, respectively, also led the nation again last year in the per capita rate of bankruptcy filings, according to new data compiled by Epiq Systems Inc., for the American Bankruptcy Institute.
"With the economy doing so well, it makes you wonder why more people are filing for bankruptcy. The reason is that with more money and jobs, there is more people are trying to protect and, even though unemployment is very low, many people still aren't seeing enough increase in wages to pay for their costs of living," said Eron Epstein, a Chattanooga bankruptcy attorney for the past 38 years.
In the past year, U.S. wages grew faster at more than a 3 percent annual rate, but that still lagged the increase in home prices and health care costs.
Although bankruptcy filings are higher in the Southeast, a bigger share of those going bankrupt are reorganizing their finances in bankruptcy court and repaying debtors through a court-ordered reorganization.
Last year, 65 percent of the filings in Alabama, 59 percent of the filings in Tennessee and 57 percent of the filings in Georgia were Chapter 13 petitions to reorganize and repay creditors under a court-ordered refinancing plan . Nationwide, only 37 percent of those filing for bankruptcy filed a Chapter 13 petition to reorganize under bankruptcy protection.
Most of the filings nationwide were Chapter 7 petitions to liquidate assets and start a new after the bankruptcy.
"Most people who file for bankruptcy here want to try to repay their debt, but they just don't have the resources," Epstein said.
Alabama, Tennessee and Georgia all had bankruptcy filings at twice the U.S. per capita rate last year despite above average job growth in the three states. One reason for the higher filings here is that creditors can more easily garnish wages for unpaid debts in the Mid South, which leads more people to seek protection in bankruptcy court earlier than they would file in other states with stricter garnishment laws.
Nationwide, total bankruptcy filings fell by 2 percent from 766,761 in 2017 to 755,182 filings during calendar year 2018.
The American Bankruptcy Institute is pushing for bankruptcy reforms to help reduce some of the costs of filing for bankruptcy protection.
"Total filings fell for the ninth consecutive year as high filing costs continue to weigh on struggling businesses and families," said Samuel J. Gerdano, executive director of the American Bankruptcy Institute in Washington D.C.
Contact Dave Flessner at firstname.lastname@example.org or at 757-6340