2010 Chapter 7 Bankruptcies in San Diego Hit New High
June 23, 2010 · Filed under Bankruptcy
Last week we mentioned that the latest data for 2010 bankruptcies had arrived. Chapter 13 figures hit all time highs in the first quarter of this year. Would the same trend take effect for Chapter 7 filings as well? The data has finally reached our hands and the results aren’t encouraging.
Just like the Chapter 13 figures, Chapter 7 bankruptcy filings in San Diego hit another all time high in the first three months of 2010. Over 17,000 claims were made in the three months alone dampening hopes of economic recovery in San Diego and California as a whole.
In this graph you can observe the upward trend in each successive quarter since 2007. The increase began well over a year before the 2008 credit crunch, and has since exploded 435% from Q1 2007 to Q1 2010.
Bankruptcy attorney Cecilia Chen mentioned in 2009, and again in 2010, that the numbers were not expected to decline largely due to homeowners losing their primary asset:
Homeowners face the largest pinch. We don’t expect a decrease in bankruptcy filings from former homeowners. Many are surprised to find out, for example, that they still owe the difference between what they owed on their mortgage and what the bank could sell it for at auction. It can also happen to people who got their bank to approve them selling their home for less than it is worth if the loan has been refinanced and/or if the second mortgage loan proceeds were not used to purchase the home. It’s a mistaken belief held by many that the deficiency can be negotiated away or simply disappear.
Silver Lining to Bankruptcy Data
There is, however, some good news. Similar to Q4 v. Q3 data in 2009, Q1 2010 data actually had a smaller percentage increase in filings compared to the previous period. What his means is the increase in Chapter 7 filings, despite hitting an all time high again, is decreasing.
The graph above tracks the percentage increase of filings between quarters. All of the numbers are above zero, so all point to a negative increase. However, what should be noted, is that for the first time in 3 years the increase between quarters dropped to below 5%. It is conceivable that the number of San Diego Chapter 7 fillings could decline by the third quarter in 2010.
However, we’ll have to wait on the data at the end of 2010 to determine whether this expectation will turn out.
For further assistance in exploring bankruptcy claim options please contact the Law Office of Cecilia Chen for a free consultation.
All data sets compiled using Rand California data.
