17 Jan San Diego Bankruptcies
If you are considering Bankruptcy Protection, you are not alone! As real estate values continue to decline, the economy struggles, and government bailouts seem to have little effect, more and more San Diegan’s are turning to Bankruptcy Protection. For the year ended 2008, there were 13,633 filings for the Southern District of California Bankruptcy Court. This was over three times the number of filings in 2006 after the new laws went into effect. If trends continue, 2009 will set a record number of filings for the Bankruptcy Court located in San Diego. As a member of the Bankruptcy Law Network, I can confidentally state that our bankruptcy case load is the highest the firm has ever experienced and only increasing!
Not surprisingly, the increase in filings at the Bankruptcy Court locaed in San Diego go hand in hand with the fact that filings are significantly increasing in states such as Nevada, California and Florida where real estate values skyrocketed and then crashed. In California, bankruptcy filings in October, 2008, almost doubled, in being up 87 percent compared with the year before. In Nevada, bankruptcies jumped 70 percent in the same period, while Florida’s filings rose 62 percent.
Adding to the mix is the fact that income since 2001 has remained relatively constant yet debt levels have increased significantly. A recent study found that the typical family who filed for bankruptcy in 2007 had static income from 2001 to 2007, yet were carrying about 21 percent more in secured debt, like mortgages and car loans, and about 44 percent more in unsecured debt, like credit cards and medical and utility bills. And the unsecured debt continues to escalate as consumers must place more reliance on credit cards to supplement their income as mortgage payments increase due to teaser rates ending and ARM loan resets, all the while housing values continue to decline.
The Southern District of California Bankruptcy Court primarily consists of San Diego County, although it stretches to Imperial County as well. While real estate values have generally been on the rise since 1996, the following statistics show an inverse relationship when compared to Bankruptcy filings in San Diego County since 2000:
But for the new laws changing in 2005 and misconception by the public that bankruptcy relief was no longer available, the filings consistently dropped from 2001 in direct relation to increasing real estate values. While incomes remained relatively constant, many San Diego residents avoided bankruptcy by supplementing their income with real estate refinances. Indeed, many cases this author saw during those time periods revealed that individuals obtained more cash from yearly refinances, than they received from their entire yearly employment income!
But for increasing real estate values, the bankruptcy filing numbers for San Diego County would have been substantially higher over the past decade. Indeed, the recession of 2001sparked a yearly increase in bankruptcy filings all across the Nation, yet just the opposite occured in San Diego County. While America was in recession and bankruptcy filings across the nation increased each year from 2001 to the new laws of 2005, San Diego experienced a yearly decline. Below are the statistics for nationwide bankruptcy filings for the same years.
As the forgoing shows, while the rest of the Nation’s filings continued to increase each year since 2000, San Diego County experienced the opposite with decreased filings. But for the real estate bubble, San Diego Bankruptcy filings would have been similar to the rest of the Nation. Real Estate spared San Diego.
Notwithstandng, now that real estate is declining both Nationally and in San Diego, San Diego County’s increased filings now seem to parallel the rest of the Nation. However, it is projected that not only will San Diego County continue to see an increase in filings like the rest of the Nation, but its increase will probably be much higher than the national average due to the pool of filings that never occured during the past 10 years but for increasing real estate values. In other words, the “pool that should have been filed” must now be added to the yearly increase of filings now.
Assuming that an additional 5000 to 10000 filing should have taken place during each of the past 5 years, thats an additional 25,00 to 50,000 filings that will end up being added to the normal filings increases. Indeed, 2008 saw 13,633 filings, the highest level, but for 2005, in 8 years, whereas the National level in 2008 is still less than all prior year filings under the old laws going back to 2000. One can only assume that the continued real estate meltdown will continue to act as a catalyst to an explosion of bankruptcy filings in the Southern District of California Bankruptcy Court.
The following graph depicts Bankruptcy Court FIlings in the Bankruptcy Court located in San Diego since 2000:
The following graph depicts the annual Bankruptcy Court FIlings in the Bankruptcy Court located in San Diego for 2004, 2006, 2007, 2008, leaving out the new law change year of 2005.
This graph shows the monthly number of Bankruptcy Court FIlings in the Bankruptcy Court located in San Diego since the new laws took effect in October, 2005. The Blue represents electronically filed cases by Bankruptcy Attorneys like Doan Law and red represents paper filed cases at the Clerk’s counter.
And finally, the most recent shocking statistic: Considering 2004 as the last accurate baseline year, there is now a 54% increase in filings when comparing December 2004 to December 2008:
December, 2004: 882
December, 2008: 1360
There is no doubt that Bankruptcies are exploding in San Diego County and will only continue to rise. Moreover, if new legislation is passed wherein homeowners can now eliminate their second mortgages, helocs, and other junior liens, and at the same time restructure their first mortgage over 40 years while reducing payments, interest, and principal balance to fair market value, one must wonder whether the Southern District Bankruptcy Court will even have the capacity to deal with Explosion of new Bankruptcy Cases!
So if you are in financial trouble, you are not alone. The Nation’s banks, auto industry, insurance industry, as well as Wall Street and Governments themselves are all experiencing signigicant financial strain. Presently there is no light at the end of the tunnel, and personal bankruptcy filings will only increase, just like corporate bankruptcy filings.
If you feel you are in financial need of a new beginning and fresh start, contact an experienced bankruptcy attorney immediatley. Bankruptcy protection is your legal right and the precise remedy our forefathers established in our Constitution when founding our Country, to maintain capatilism, productivity, and growth. Believe it or not, not only is Bankruptcy a personal solution, but its also one of the National Solutions to our current economic crisis, in that once inflated values, artificial assets, and phantom money is eliminated, the fundamentals of a free market society will once again flourish.
Written by Michael G. Doan
Bankruptcy Law Network (BLN)
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