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Tampa Bay bankruptcy filings drop as economy improves

 
Published July 30, 2015

In another sign that Tampa Bay's economy is on the upswing, bankruptcy filings are way down.

During the six months ending in June, 5,728 bay area residents filed for bankruptcy protection, 12.4 percent fewer than in the same period a year ago.

"The economy has been improving, and so a good economy floats a lot of boats," Judge Michael Williamson of Tampa's bankruptcy court said Thursday.

The decline in bankruptcy cases comes as the number of new foreclosure filings in the bay area has plunged to the lowest level since 2006. And the percentage of Tampa Bay homeowners seriously delinquent on their mortgages also has dipped, although it remains higher than the national rate.

A just-released bankruptcy report from the federal court system found that filings across the county dropped 12 percent last year. However, the report noted a phenomenon that has been particularly prevalent in the bay area — there are more repeat filers than in the past.

Nationally, more than a third of the 300,000 debtors who applied for Chapter 13 repayment plans reported that they had filed a bankruptcy petition during the previous eight years.

Figures weren't available for Middle District of Florida, which includes the Tampa Bay area, but Williamson and other Tampa judges have started cracking down on people who file multiple times. In the past year and a half, they have declared at least 85 debtors "abusive serial filers'' and banned them from filing new petitions for up to two years.

Among the repeat filers: a Palm Harbor couple who filed 11 petitions over eight years and a Spring Hill man who has filed seven petitions since 2008.

People who repeatedly file typically do so to block foreclosure of their homes. A bankruptcy filing immediately stops foreclosure proceedings and enables a borrower to continue living rent-free for months, if not years.

Perhaps the most egregious example was that of a Pinellas County man who hadn't made a mortgage payment in 12 years when a judge declared him an abusive serial filer in 2013 and banned him from filing again for two years. That gave the bank time to resume foreclosing so it could take back the house.

Williamson expects that at least a portion of future bankruptcy filings will be by borrowers with homes that already have been foreclosed but that did not bring enough at sale to pay off the mortgage debt.

"Those people will now be pursued (by banks) and have potential deficiency judgments, but there's no way they'll be able to pay them because of the huge disparity between the debt and the value of houses," said Williamson, who becomes chief bankruptcy judge of the Middle District on Oct. 1.

The district, which spans 35 counties from Jacksonville to Fort Myers, is among the busiest in the country. In the district as a whole, 16,033 bankruptcy petitions were filed in the six months ended in June, a 15 percent drop from the same period a year ago.

Among other findings of the newly released national bankruptcy report:

• The median average monthly income of debtors last year was $2,616, slightly less than in 2013. Their median average expenses — $2,600 — also were lower.

• Overall, debtors categorized 93 percent of their debts as "dischargeable" — meaning they were eligible to be wiped out in bankruptcy proceedings. Credit card and other nonsecured debts are dischargeable; student loans generally are not.

• The percentage of debtors filing under Chapter 13 last year rose 2 percent from the year before. Under Chapter 13, individuals make installment payments to creditors under court-confirmed plans.

Contact Susan Taylor Martin at smartin@tampabay.com or (727) 893-8642. Follow @susanskate.