Chapter 13 Bankruptcies in San Diego Hit All-time High Again in Q4 2009

Quarter 4 2009 data for Chapter 13 bankruptcy filings were released this week and the results aren’t good. Chapter 13 bankruptcy filings in San Diego have steadily increased from the second half of 2006 and have broken quarterly records ever since including Q4 2009 breaking the previous quarter’s record. Q4 filings in ’09 amounted to 3453 filings compared to the previous Q3 number of 2966 for an increase of over 16%.

Chapter 13 bankruptcy claims have continuously increased since the financial crisis hit America in October, 2008. The upward trend has mostly increased steadily since quarter 4 of 2006 as noted in the graph below.

Chapter 13 San Diego Graph 2007-2009

Unlike Chapter 7 filings for the same time period which have increased consistently but at a slower rate, Chapter 13 claims have not only increased, but the numbers are growing more and more for each quarter in 2009. The table below notes the percentage change and filing numbers since 2006 in the San Diego area.

Date Q1 Q2 Q3 Q4
2006 1,412 -15% 1,203 -14% 1,032 -8% 945
2007 1,108 18% 1,304 11% 1,448 9% 1,572
2008 326 437% 1,751 11% 1,936 7% 2,080
2009 2,314 13% 2,620 13.21% 2966 16.42% 3453

Tracking Chapter 13 filings are of particularly interesting to track because it provides a glimpse of those who are dealing with liquidation yet retain secured debts thus prevent foreclosure on their homes (and other large assets).

This is in contrast to Chapter 7 liquidations that typically includes all assets in proceedings.

When you combine both Chapter 7 & 13 the trend becomes more pronounced as Chapter 7 filing exceed Chapter 13 filings by a wide margin (7 to 1 in Q2 2009 and sometimes 10 to 1). You can clearly see in the graph below the stacked addition of Chapter 7 and Chapter 13 numbers are still on a steady rise.

Chapter 7 & 13 San   Diego Graph 2007-2009

If you find yourself faced with the prospect of filing for bankruptcy then pay attention to some important tips from our bankruptcy attorney Cecilia Chen.

Cecilia commented on the differences between Chapter 13 and Chapter 7 filings:

In my experience, I am filing a lot more Chapter 7 cases than Chapter 13.

The financial crunch has also played a noticeable role in the type of filer as well:

As a direct result of the recession, more and more families simply do not have the income needed to qualify for Chapter 13. Most of my clients are hard-working individuals who do not have the income each month to repay their debts and obligations as a result of illness, unemployment or reduction in pay and hours.

When asked about the expectations for the rest of 2010 Cecilia suggested,

Government interventions introduced this year will start to disappear, shadow inventory (houses that banks now hold but have yet to put up for sale) will hit the market and mortgage rates will start to rise. We’re not expecting bankruptcies to slow.

Bankruptcies are an unfortunate reality in our economy today and if you find yourself facing this prospect you deserve professional and experienced representation in proceedings.

Contact bankruptcy attorney specialist Cecilia Chen with further questions regarding Chapter 13 proceedings in the San Diego area.

* All data, not including graphs, are courtesy of RAND California.

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