Spokane Journal of Business

Bankruptcy activity fell in Eastern Washington, North Idaho

Drop marks third year of fewer filings, though some foresee rise in '13

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Bankruptcy filings declined for the third consecutive year, with 750 fewer filings in Eastern Washington in 2012 than in the previous year.

Attorneys here, however, say bankruptcies could climb this year.

Businesses and consumers filed a total of 5,464 bankruptcy petitions last year with the U.S. Bankruptcy Court's Eastern District of Washington, a 12 percent decrease compared with 2011. The 2012 filings in the Eastern District included more than 4,300 Chapter 7 filings, seeking liquidation of assets, and 23 Chapter 11 filings, seeking time to reorganize.

The Eastern District is comprised of 20 Washington counties east of the Cascades.

In Spokane County alone, almost 2,000 bankruptcy cases were filed in 2012, compared with 2,143 the year prior.

Kevin O'Rourke, an attorney with Spokane-based Southwell & O'Rourke PS, says filings are down throughout the eastern region because of a growing optimism about an economic recovery.

In the U.S. Bankruptcy Court's District of Idaho, the Coeur d'Alene court reported 1,212 filings between December 2011 and November 2012, a 10 percent drop compared with the year-earlier period. The Coeur d'Alene court had more than 1,000 Chapter 7 filings and fewer than 10 Chapter 11 filings last year in the 11-month time frame.

Cameron Phillips, owner of Coeur d'Alene-based Cameron Phillips PA law firm, says he attributes much of the decline in bankruptcy activity in North Idaho to an overall decrease in the number of mortgage issues faced by consumers. He predicts, though, that there will continue to be a high number of bankruptcy filings due to the economic climate.

"I think we'll have increasing filings for a while until we get this economy cleaned up and get rid of the problems that arose over the last four or five years," he says.

O'Rourke predicts the region will see a rise in consumer bankruptcy filings this year, due partly to the expiration this year of the Bankruptcy Abuse Prevention and Consumer Protection Act passed in 2005. The law made it more difficult to file a Chapter 7 bankruptcy, he says.

Phillips also believes Chapter 7 filings will increase this year, but predicts the number of medical debt-related bankruptcies will decline, particularly among consumers who don't have health insurance, due to the new health care reform laws that soon will take effect.

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