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Consumer bankruptcies are on the rise in southern New Jersey, and with unemployment and foreclosures up in 2009, the number of people who file is expected to surpass last year's total.

August saw 736 consumer bankruptcy filings made in the state's seven southernmost counties, including Atlantic, Cape May and Cumberland, a 43 percent increase from the 516 filings in August 2008, according to the U.S. Bankruptcy Court, New Jersey District.

Comparing January through August 2008 with the same period in 2009, bankruptcies have risen 28 percent in southern New Jersey and show no sign of slowing down here or across the country.

"Consumers are continuing to turn to bankruptcy as a shield from the sustained financial pressures of today's economy," Samuel Gerdano, executive director of the American Bankruptcy Institute, said in a statement. "As a result, we expect consumer filings to top 1.4 million this year."

Brian Thomas, a Linwood bankruptcy attorney and trustee, says the level of people's debt is significantly higher than it was five years ago. In addition, he has seen more seniors electing to file.

"Some senior citizens think they can work indefinitely, then something happens and they can't," Thomas said last week. "They get sick. Their spouse gets sick. And if you don't work, and all you have is Social Security, that's not going to pay off a $60,000 credit card bill."

Many bankruptcies also are tied to potential foreclosures, but Thomas said lenders these days have been more willing to modify homeowners' loans.

As a result, "if a client's only problem is their house with one mortgage, and if they don't have any other debt, there might not be any reason to go into bankruptcy," Thomas said.

Eric Browndorf, a bankruptcy attorney who also has dealt with corporate restructuring, agrees.

"I'd say more than half of the banks out there are really bending over backwards to help people," he said.

Local bankruptcy attorneys say rising unemployment, or even just the reduction of hours at work, is breaking people financially. New Jersey has shed 155,700 jobs, or 3.8 percent of its total work force, since the recession began in December 2007.

Browndorf said more people are claiming insolvency under Chapter 7 of the bankruptcy code. In Chapter 7, people have the ability to wipe out most of their debts, unlike Chapter 13, in which filers must create a plan to pay back a certain amount of debt to their creditors.

The offices of South Jersey Legal Services, which provides free legal assistance to low-income residents, have been hit hard since the recession began, Executive Director Douglas Gershuny said.

The nonprofit opened up 629 bankruptcy cases in 2007 and handled another 863 in 2008, Gershuny said. This year, he expects that number to reach about 1,000.

Meanwhile, since 2007, Gershuny said he has lost 18 staffers, including 13 attorneys, through layoffs and attrition because of budget cuts. One source of state funding that totaled $3.2 million in 2008 dropped to $290,000 in 2009, Gershuny said.

"The legislature, to its credit, has given us replacement money, but it didn't cover it all," he added. "We're trying to do our best with what we have."

But Gershuny is concerned the wave of bankruptcy filings is only going to grow.

"We're starting to see a lot of folks who, before, wouldn't have been able to qualify to see us," he said. "These are your typical, working families."

Eligibility to receive legal help from South Jersey Legal Services depends on income. For more information, call 800-496-4570.

E-mail Erik Ortiz:

EOrtiz@pressofac.com

9 comments:

• IzzyStone (307) posts 10:53 pm

  Gosh, for a wannabe "destination resort," they sure go to bed early there, eh? (with each other?) hmmm. Strong opening by several of them; weak finish. Sigh. Smell the poppers? "A.C.: Always Turned In!" [sic].

• IzzyStone (307) posts 7:50 pm

  P.S.: you talk as if my wife skipping out was a bad thing. You've never been married, obviously - at least to a woman. Hope springs eternal....

• IzzyStone (307) posts 7:48 pm

  Doc -- kindly deduct $99.00 of the $100.00 owing for your misspellings, poor punctuation, chronic lack of originality, strained humor, OCD, utter lack of logic, and generalized anger. Physician, heal thyself. Your crystal ball is all fogged [sic] up! ROTFL!

• IzzyStone- (51) posts 6:07 pm

  IzzyStone- aka todfat(well, I am)..no wonder you are so angry, bigoted, homophobic, prejudiced, and the list goes on. Obviously that cancer ruined your mind, and clouded your thinking. You see IzzyPebbleBrain, idiots like you are the cancer of society. Your wife left you, you lost your job, you went into debt, claimed bankruptcy, so you have proved to society that you good at one thing- FAILURE. Now we are getting a glimpse of why you are so angry and hateful. That will be 100 dollars Izzy(todfat) for your psychiatric profiling session!

• IzzyStone (307) posts 5:30 pm

  do the math, amigo: $70,000.00 minus $14,000.00 = $56,000.00 is all I, ah, "redirected." Tee hee hee. Wow I wish it was your "hundreds of thousands." U were close: I got $151,000.00 from Blue Cross to pay the hospital - I held back $50,000.00. Then I sued them just for the sport of it. My spree: a Harley, a 7-week scooter ride solo from A.C. to Malibu, a 2-seater Euro sporty car, $3500.00 from AT&T Visa (sweet!) for repairs to make it roadworthy, $15,000.00 from Big Computer Co. credit union (sweet!) to sue State Farm, and asst. frivolous spending (post-divorce!) on my WAMU, Wells Fargo, and B of A cards, esp. at the CHAMP pot club in SF (dulce!). Oh, those were the days, my friend, I thought they'd never end. P.S.: perhaps the cancer was payback? cheap at twice the price! Drinks all around! On me!

• IzzyStone (307) posts 5:02 pm

  stealing? oh, ha ha ha ha ha ha ha. Is it stealing that scares ya? Lessee: $8,000.00 property taxes for my relatives' 2500 sq. ft. houses on Pitney Island - and extra for "beach badges." Hmmmm. Or, as shown on TV this week, a $35.00 per check bounce fee at major banks, or, $$$$ no-show and $$$ lo-show employees by the truckload in Atlantic City, or double- and triple-dipping Govt. employees from Bergen County to Cape May County, or dorky Stockton raising tuition by what, 20%? I got mine, Jack. Spare me the hand-wringing.

• IzzyStone (307) posts 4:56 pm

  my bankruptcy stemmed from: divorce; unemployment; $1770.00 a month alimony & support, and, just for kicks, Stage IV cancer. The disease enabled me to pay the banktuptcy off in 5 years, rather then the stipulated 3 years. You see, Uncle Sugar was going to stiffen the bankruptcy requirements, but the Democrat Congress - Nancy & Barney, LLP - said "NO WAY!!!" So I got in under the wire. LMAO, still!! Any other questions, moron?

• shorebum (5) posts 3:57 pm

  @IzzyStone Are you actually bragging about duping the banks out of hundreds of thousands of dollars because you don't possess the wherewithal to manage your funds responsibly? Where I come from that isn't bankruptcy, it is stealing. You sir, are an idiot.

• IzzyStone (307) posts 9:52 am

  when i filed for bankruptcy in early 2000, the courtroom was SRO. the process was a cakewalk. for an $1800.00 lawyer's fee, I wiped out $70,000.00 of debt (divorce; job layoffs; family debt; etc.) I paid back $14,000.00, per the bankruptcy judge, over a 3-year period. In the year before bankruptcy, i bought a Harley and a used sportscar, aside from my Sable. then I stiffed my credit union for a $15,000.00 loan I paid to my other lawyer, who was suing State Farm Ins. for me. Then I waited 6 months, the statutory requirement, so those debts would qualify in the larger bankruptcy amount. It was one of the best windfalls I ever had. At the time I was receiving money from 3 "spendhrift" trust funds, but the judge only asked a question or two about those. Is this - was this - a great country, or what?

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