Filings in area set court record

Filings in the bankruptcy court increased more than 1,500 from the year 2000.
By BOB JACKSON
VINDICATOR COURTHOUSE REPORTER
YOUNGSTOWN -- A fragile economy, free-spending consumers and a flux of easy credit are being blamed for making 2001 another record-setting year at the U.S. Bankruptcy Court in Youngstown.
Some people expect the trend to continue this year.
There were 5,480 bankruptcies filed in 2001 at the Thomas D. Lambros Courthouse and Federal Building downtown, shattering the record of 3,929 filed in 2000. The court serves people and businesses in Mahoning, Columbiana, Trumbull and Ashtabula counties.
"It was just a tremendously busy year," said Wanda Migletz, supervising clerk.
Staff works over: Court staff logged loads of extra hours, working nights and weekends, to keep up with the growing caseload, Migletz said. Clerks were hit with a flurry of cases Monday, the last day of the year, when about 35 were filed.
"That happens every year," Migletz said. "It seems the lawyers want to clean off their desks, so we just expect a deluge."
The bankruptcy increase was felt across the country, not just in this area.
The American Bankruptcy Institute in Alexandria, Va., reported that bankruptcy filings nationwide increased 14 percent from 2000 to 2001.
"Hangover consumer debt from the free-spending '90s and a weakened economy today mean more families will face the need to file for protection well into 2002," ABA Executive Director Samuel Gerdano said in a prepared statement.
Migletz said the staff is too busy keeping up with current filings to wonder whether the record will be broken again this year.
"We're not even thinking about 2002," she said. "We don't care to think about it."
Reasons for filings: Judy Booth of Consumer Credit Counseling of Columbiana County said the numbers will probably remain high again this year. A flagging local economy and the increasing ease with which credit cards can be obtained are the primary reasons.
"When credit companies give cards to people who don't have a job, it's inevitable what's going to happen down the road," Booth said. "Students, especially, have oodles and oodles of credit cards, but no jobs."
People have grown accustomed to getting whatever they want, whenever they want it, regardless of whether they can afford it, Booth said. Rather than saving and paying cash, people charge their purchases and rack up increasingly high credit card bills.
But too often, they get swallowed up by their buy-now, pay-later habits.
"People live on the edge," Booth said. "They live from payday to payday just making ends meet with no savings account to fall back on."
But if they have just one month of sickness, layoff from work or any other catastrophe that causes them to miss a credit card payment, they end up slapped with additional fees and higher interest for late payments.
"When that happens, people begin to feel like there's just no way to play catch-up, and they end up filing bankruptcy," Booth said.
Credit counseling: Appointments with people seeking credit counseling generally slow down at the end of the year, but Booth said her agency stayed busy through December and is booked solid this month. That makes her believe the increase will continue this year.
Migletz said 2001 also saw a slew of corporate Chapter 11 bankruptcies filed in Youngstown.
"The steel company filings were a major factor in our increase," she said. "They are very time consuming. There's a lot of paperwork involved."
When major employers like CSC Ltd. and LTV Steel shut down, that forces many of their workers into bankruptcy as well, Booth said.
Reform bill: Another reason for the increase is impending passage of a bankruptcy reform bill that is expected to make it more difficult for average consumers to seek bankruptcy protection.
Atty. Jeffrey Adler said uncertainty over when the legislation would pass had people coming forward in droves, hoping to file early and beat the more stringent regulations. He said it's still pending but he doesn't expect it to pass anytime soon.
The major concern has been that the new law will make it much more difficult for consumers to file for Chapter 7 bankruptcy, which allows them to erase most debts and start afresh.
"That certainly has a lot to do with it," Booth said.
bjackson@vindy.com