State’s bankruptcies soar
ACROSS MISSISSIPPI — The 12 months of the worst part of the national recession translated into sharply higher numbers of Mississippi residents and businesses filing for federal bankruptcy after losing track of debt in the face of increased joblessness, The Associated Press reports.
According to the Administrative Office of the United States Courts, 14,454 individual and business bankruptcies were filed in the state between Oct. 1, 2008, and Sept. 30, 2009, the accounting year for the agency.
That is up 22.3 percent from the 2007-08 total of 11,816.
Individual bankruptcies rose 22 percent for the most recent year to 14,014 from 11,485 the previous year. In a state of many family-owned small businesses, bankruptcies exploded 33.5 percent to 229 from 172 in 2007-08.
The Northern Federal Judicial District of Mississippi saw total bankruptcies rise 27.3 percent. Individual bankruptcies rose 27.1 percent and business bankruptcies hopped 32.7 percent. In the Southern Federal Judicial District, total bankruptcies were up 18 percent. Individual bankruptcies rose 17.6 percent and business bankruptcies jumped 31.4 percent.
Nationally, total bankruptcies rose 34 percent over the same time, with business filings jumping 51 percent and individual filings going up 33.9 percent.
Michael Pond, who has been practicing bankruptcy law for 17 years in Jackson, said the profile of those filing has changed drastically.
“We’ve always had working class clients who got hurt on the job, got divorced or saw their jobs move overseas,” Pond said. “What we see now is that many of our clients are more middle and upper-middle class who 17 years ago didn’t file for bankruptcy.”
Pond said it is not unusual to see families making six-figure incomes in deep financial trouble. He blames the trend on a combination of a poor economy and excessive use of credit.
Sherry Rainey, president of Consumer Credit Counseling Service of Jackson, said that part of the problem in the state — besides the main reasons of increased joblessness and the use of too much credit — is simply that many do not know the basics of personal finances.
“We have a large population here that has never been taught how to effectively manage a budget,” Rainey said.
The recession and the slash in consumer spending has pushed many small businesses, especially in retail such as stores and restaurants, to the brink of closure, if not into bankruptcy, said Ron Aldredge, state director of the National Federation of Independent Business.
“There’s very few sales, which result in businesses not being able to keep their inventory up and having less to sell,” he said.
Aldredge said small business owners, to stay afloat, have cut employee salaries drastically or resorted to layoffs. Some owners he represents have not taken a salary from their business for up to two years and have been “plowing everything back into the business.” Others have closed because they cannot obtain short-term financing to keep inventories stocked, he said.
There’s very little else many businesses that have stayed open can do to cut expenses without closing, he said. In the meantime, the owners could face future expenses, especially if small businesses are mandated to provide health insurance coverage for their employees.
“They’ve already tightened their belts as much as they can,” he said.
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