Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, August 29, 1995 TAG: 9508300014
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
SOURCE: MAG POFF STAFF WRITER
DATELINE: LENGTH: Medium
John W.L. Craig II, clerk of the U.S. Bankruptcy Court for Western Virginia in Roanoke, made the prediction in his midyear report released Monday. Craig said he is raising his forecast from 6,700 filings, made at the end of the first quarter, to 6,882 new cases this year.
If that prediction comes true, the number of individuals and companies seeking legal protection from their creditors would rise to its highest level for any year, exceeding the record of 6,846 set in 1991.
Craig said bankruptcy filings have increased for nine consecutive calendar quarters. "The first quarter of this year showed a rate of increase doubling that of 1994," Craig said, "but the second quarter has proved to be even higher."
Except for two troughs that began in 1983 and 1992, Craig said, the court has seen steady growth in filings. If the trend holds for the next six months, he added, filings for 1995 will be 24.9 percent higher than they were two years ago.
Filings are up more than 15 percent, with every category of bankruptcy increasing substantially except for corporate reorganizations. That category is down significantly, with only 13 filings in the first half of this year compared with 42 for the same period in 1994.
The number of people filing for wage-earner plans for repayment of debts slipped in the first quarter for the first time in several years, accounting for 14.5 percent of the total. At the year's halfway point, wage-earner plans were 14.56 percent of the whole, up slightly. The vast majority of filings still remain consumers seeking liquidation, Craig said.
Howard J. Beck Jr., a former clerk of the court who specializes in bankruptcy with the Roanoke law firm of Gentry, Locke, Rakes & Moore, said the district always has had a high percentage of consumers seeking liquidation, but that is true nationally, as well.
Beck said the increase in filings began with adoption of current bankruptcy law in the late 1970s. It was hoped then that more people would seek wage-earner plans, Beck said, but it didn't turn out that way, because many consumers preferred liquidation that clears their debt.
Corporate reorganizations seem to run in cycles. The number has dropped off recently, he said, but he predicted an increase during the next 12 to 18 months.
by CNB