Personal bankruptcy on rise in Thurston

Personal bankruptcy filings in South Sound rose nearly 25 percent in the first quarter of this year from the first quarter of 2009, according to data compiled by the U.S. Bankruptcy Court for the Western District of Washington.

The data show that 300 Thurston County bankruptcies were filed through the end of March this year, up from 241 filed in the same period a year ago. For all of 2009, filings rose nearly 40 percent to 1,152 from 837 filed in 2008, according to court data.

“They continue to be high, and I do think it’s a reflection on the economy,” Seattle-based bankruptcy court clerk Mark Hatcher said about filings throughout Western Washington. Total filings rose almost 18 percent to 6,441 in the first quarter of the year from 5,477 in the first quarter of 2009, Hatcher said.

Of the first-quarter filings in the county, most were Chapter 7 or Chapter 13, although there were two Chapter 11 filings, he said. In the first quarter of 2009, all were either Chapter 7 or Chapter 13 filings, Hatcher said. Chapter 7 filings are considered straight liquidations, while corporations typically file Chapter 11 to restructure debt and remain in business. Chapter 13 requires that creditors be repaid over time.

Olympia bankruptcy attorney Jennie Patton said her office remains busy and that she hasn’t seen any “leveling off” in the number of filings here.

“Many people are coming to the end of the road and realizing bankruptcy might be their best option,” she said. Factors contributing to the steady pace of filings include unemployment and clients struggling to modify their mortgage loans before it is too late, she said.

Such modification programs can help homeowners lower monthly mortgage payments, forgive a portion of the loan balance or forgive payments in arrears, Patton said. Although these programs exist, lenders are overwhelmed by the number of people seeking help, she said.

“It is a long process that has many steps and is wrought with frustration,” Patton said. In the event a mortgage can’t be modified or takes too long, some clients come to her wanting to talk about bankruptcy as a “plan B,” she said.

Those seeking protection under federal bankruptcy laws also continue to represent a cross-section of the county’s population. It’s not just the poor or those who don’t have access to credit; the group includes state employees or those who worked in retail and building and construction trades or relied on commission sales for their income, Patton said.

Rolf Boone: 360-754-5403