Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, April 9, 1991 TAG: 9104090066
SECTION: BUSINESS PAGE: A5 EDITION: METRO
SOURCE: GEORGE KEGLEY BUSINESS EDITOR
DATELINE: LENGTH: Medium
The larger caseload is due to a "tremendous amount of consumer-credit-related debt," Western District court officials said Monday.
The increase both locally and across the country is straining the staff and the facilities of the U.S. Bankruptcy Court, said John W. L. "Chip" Craig, clerk of the district office.
Although the number of filings dropped slightly in March, the trend continues up "in every category and the growth continues very rapid," Craig said.
Even sharper was the 54 percent increase in the number of businesses seeking protection from creditors. That number rose to 242 in the January-March period from 157 a year earlier.
The Western District filing pace is a little faster than the national-average increase of about 30 percent in first-quarter bankruptcies, according to Edward Flynn, a federal analyst.
More than 90 percent of the petitions nationwide are filed by consumers and at least 40 percent are by couples, said Flynn, of the Bankruptcy Division of the U.S. Courts Administrative Office in Washington.
During a recession, the increase in bankruptcies comes from a combination of factors, Flynn said. They include the easy availability of credit, diminished stigma attached to declaring bankrupcty, legislative changes that have made filing easier and higher medical expenses, he said.
A lot of bankruptcies are prompted by divorce, Flynn said. "For one reason or another, people can't keep up. . . . There's no absolute one thing that causes it."
His office has projected an overall 14.7 percent increase for the fiscal year ending Sept. 30. But Flynn predicted that those numbers may go higher than that. Last year's total was 15.1 percent ahead of 1989.
"We've seen a steady increase" in bankruptcy since 1984, he said.
In the Western District, Craig has been able to prove the need for more staff and space to handle the growing load. He's hired three people in the last month and he hears that he may get an emergency allotment for four more employees.
"We're growing faster than the staffing formulas can keep up," he said.
His main office, on the second floor of the Commonwealth Building in downtown Roanoke, is doubling its size, growing by about 4,000 square feet. "We need every square inch of it," he said.
To handle the growing load of cases from the coalfields and other areas of Southwest Virginia, Craig said he hopes to open an Abingdon office. If he had the space, "I could open a five-person office there tomorrow," he said.
Craig is bracing for a heavy work year. The second quarter is always a mirror of the first, he said, "and we really get the punch in the last third of the year."
Craig called his office a little-known growth industry for the Roanoke Valley, noting that the region's bankruptcy lawyers also are increasing their staffs.
A. Carter "Chip" Magee, a Roanoke lawyer whose firm is active in bankruptcy practice, said the economy is "still riding the crest of the bankruptcy wave."
Higher numbers of bankruptcy petitions are "indicative of a stagnant economy. Consumers are borrowing more," he said.
by CNB