Filings last month in the Phoenix metro area jumped 61 percent from a year earlier, while statewide filings increased 63 percent, according to the U.S. Bankruptcy Court for the District of Arizona. All told, 1,117 Arizona consumers and businesses sought protection last month, including 745 in the Valley.
"We're seeing a bit more desperation," said Mike Sullivan,
director of education at Phoenix debt-counseling firm Take
Charge America. "More people feel totally lost because of the
housing situation." Experts also cite hefty credit-card
debts, spiraling medical bills and slowing job growth as reasons
for the increase.
While recent Federal Reserve interest-rate cuts might offer
modest relief to some borrowers with variable-rate car, home or
credit-card loans, Sullivan said that could be offset by rising
oil prices and the weak dollar, which has made some imported
goods more costly.
Of the 745 Valley filings last month, 550 were Chapter 7
petitions that allow a fresh financial start for borrowers after
various non-exempt assets have been distributed to creditors.
Most of the rest were Chapter 13 filings featuring
debt-repayment plans for borrowers with regular income. Of
the 1,117 statewide filings, 842 were Chapter 7 petitions.
While bankruptcy filings have trended higher throughout the
year, they still haven't reached the record levels of 2005, when
a flood of borrowers filed for protection before a tougher
reform bill took effect. October was the month when
bankruptcy filings reached a peak in 2006.