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Bankruptcy in Ohio, Part 1

Despite improved bankruptcy rates, Ohio foreclosures could signal increase in bankruptcy filings


Home foreclosures rose in October, although still lower than a year ago

A Nov. 10 article in the Dayton Business Journal reports that home foreclosure remains a serious problem in Ohio:
Ohio foreclosure activity rose 1.71 percent along with the rest of the nation in October, but dropped compared to a year ago, according to a new report from RealtyTrac Inc.

The Irvine, Calif.-based company said 8,691 properties in Ohio in October received a default, auction or repossession notice. While the figure is an increase from the previous month, foreclosure activity fell 34 percent from October 2010.

Foreclosure activity in the Dayton area also showed a similar pattern:

  • Butler County foreclosure activity fell 4 percent to 395 properties, down from 411 in September and up from 325 in October 2010.

  • Clark County foreclosure activity rose 41 percent to 97 properties, up from 69 in September and up from 71 in October 2010.

The article also lists totals for other counties.

Banks' settlement talks with Attorneys General may proceed without California

Ohio is not one of the dissenting states in the negotiations among the states' attorneys general, the federal government and the five largest banks. The state AGs in Calfornia, Delaware, Massachusetts, Nevada and New York have all raised serious concerns about the proposed settlement, and according to a Nov. 23 piece in The Wall Street Journal, regulators and banks are prepared to move ahead with a settlement that does not include California.

The delays in bringing banks to task, in light of ongoing foreclosures, indicates that for many homeowners filing for the bankruptcy protection of Chapter 13 remains the most practical method of saving a home. (For debtors whose debt amount exceeds a certain limit, Chapter 11 would have to be used; Chapter 7 is rarely used to save a home from foreclosure.)

Bankruptcy filings, U.S. versus Ohio

To get an idea of recent trends, let's compare national rates of bankruptcy filings with the number of filings in Ohio, according to data from the U.S. Courts; all data are from the cited year, as of Sept. 30 [Note--due to slight annual variances, data are not exact totals from year to year]:

  • In 2007, U.S. filings were 801,269; in 2008, 1,042,993, for an increase of 30.2 per cent. During that same period, Ohio residents fared better, recording in the--

    • Northern District, in 2007, 26,417 filings and 29,060 in 2008, for an increase of 10.0 per cent;

    • Southern District, in 2007, 22,110 filings and 25,578 in 2008, for an increase of 15.7 per cent;

  • By 2009, U.S. filings were up to 1,402,816, an increase of 34.5 percent over 2008; year to year in Ohio--

    • Northern District filings rose to 37,595, an increase of 29.4 per cent from 2008, an increase of 29.4 per cent;

    • Southern District filings climbed to 32,020, a bump of 25.2 per cent;

  • By 2010, the U.S. saw 1,596,355 filings, another jump of 13.8 per cent, while in Ohio rose once more (although less severely)--

    • Northern District reached 38,902, or 3.5 per cent from the preceding year, and

    • Southern District recorded 33,605, for another increase of 5.0 per cent.

  • By Sept. '11, rates had fallen from the preceding year; in the U.S., 1,467,221 were filed, a decrease of 8 per cent from 2010; In Ohio:

    • Northern District filings were 32,413, a decrease of 16.7 per cent from 2010, and

    • Southern District levels dropped to 28,950, a drop from 2010 of 13.9 per cent.

Ohio's increases were less than in U.S., decreases were greater

Overall, then, Ohio residents have been less distressed than the U.S. population as a whole, based on overall percentages. Nevertheless, more than 60,000 bankruptcies were filed in Ohio as of Sept. 30. If foreclosures maintain a rising trend, bankruptcy rates may begin to rise again.

Next, in Bankruptcy in Ohio, Part 2: basic concepts and protections of consumer bankruptcy.

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