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Another Sign of Bold Economy: Bankruptcies Drop

Finance: Across-the-Board

Decline May Change as

Holiday Bills Roll in

An improving local economy has led to a decline in all types of bankruptcies in San Diego, statistics from the U.S. Bankruptcy Court show.

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However, the decline in bankruptcy is puzzling to one local attorney who practices before the court.

“It’s hard to say what’s causing the decline in filings. With the increase in credit card debt by the American public you would think that bankruptcy filings would go hand-in-hand, but they aren’t yet,” said John C. Colwell, an attorney in the San Diego law office of Reed V. Langlois.

For the 12 months ended Dec. 31, Chapter 13 personal debt reorganizations decreased 18 percent from 1998, while Chapter 7 liquidation filings dropped 16 percent, said Barry Lander, chief clerk of the U.S. Bankruptcy Court for the Southern District of California. Chapter 11 corporate bankruptcies dropped 25 percent from 1998 as well.

In 1999, there were 3,611 Chapter 13 filings; 51 Chapter 11 filings; and 11,977 Chapter 7 filings, Lander said.

Chapter 11 corporate bankruptcies peaked at 382 in 1991 and have declined nearly every year since. Chapter 13 filings crested at 5,094 that same year. Chapter 7 bankruptcies, however, reached their highest number , 14,393 , in 1997.

Michael Weintraub of the Mission Valley law firm of Weintraub & Bokovoy sees the reduction in filings as a result of rising real estate prices in the county that have enabled borrowers to refinance their properties and consolidate debt.

“I think bankruptcy filings will pick up (later this year) when people realize Christmas shopping and Internet shopping has put them behind,” Weintraub said.

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