2009 a big year for bankruptcy in Central Florida

With the number of bankruptcy filings by U.S. consumers and businesses surging, 2009 has been marked as the seventh worst year on record. 1.43 million petitions have been submitted nationally, over 20,000 of which were in Central Florida!

According to data collected from the nation’s 90 bankruptcy districts, filings increased 32% nationwide from 2008 to 2009. In Central Florida, filings increased 58% from 2008, and 188% from 2007.

Compared to the rest of the country, Florida has the 12th largest increase of 44%. Arizona experienced the fastest increase of 77%, followed by Wyoming with 60%, Nevada with 59%, and California with 58%.

Florida workers are waiting to see what’s going to happen once the space shuttle stops flying next year, which will leave 7,000 space industry employees jobless. "It's very, very sad to see people in this situation," said Merritt Island bankruptcy attorney Carole Bess.

Bess thinks the problem is getting worse faster and we will be experiencing a new wave of businesses closing. A downward spiral occurs as businesses increasingly close because the number of unemployed rises, which potentially leads to even more bankruptcies.

Experts believe some of the increase is because of a natural recovery as consumers and attorneys become used to the recent overhaul of bankruptcy laws.

According to John Pottow, a bankruptcy professor at the University of Michigan, the return of the high number of filings show the failure of the 2005 overhaul bill, which made filings more costly and time-consuming as consumers had to go through exhaustive paperwork to determine eligibility for Chapter 7 bankruptcy and added liability for attorneys who provided assistance.

"It never made sense in the first place that you could change the laws and make all these bankruptcies go away,” said Pottow, who would like the 2005 law changes repealed. “If people are encountering financial distress, you can only scare them away for so long before they come back again.”