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Local bankruptcy filings on rise
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BY JAMES HAGGERTY
STAFF WRITER
After operating a Pittston trucking company for more than 35 years, the debt was too much for Tom Smith.
“Fuel went crazy and the (freight) rates never went up,” said Mr. Smith, 65, of Pittston, who was president of T.C. Smith & Sons Trucking Inc. “Our fuel bill was over $100,000 a month. Once you get behind one month, with the payments we had and all the equipment, you don’t catch up.”
T.C. Smith & Sons closed in April, furloughed its 25 employees and filed bankruptcy papers to liquidate its property and distribute the proceeds to creditors.
Bankruptcy case filings are climbing regionally and nationally. Rising unemployment and household debt and higher costs of living are spreading insolvency.
“With increasing economic problems and a larger number of Americans who can’t afford the credit they’ve taken on, it’s no surprise that bankruptcies are increasing,” said Travis Plunkett, legislative director for the Consumer Federation of America, a nonprofit association of public interest groups based in Washington, D.C.
Bankruptcy case filings for the year ended June 30 increased 29 percent nationally, 12 percent statewide and 21 percent in the regional U.S. Middle District of Pennsylvania, federal data show. Business bankruptcies soared 42 percent nationally, 21 percent statewide and 23 percent regionally during the same period.
T.C. Smith’s trouble started in the fall of 2006, when the company lost a $3 million hauling contract.
“We had 18 brand-new trucks,” Mr. Smith said.
Bankruptcy lawyers hear clients talk about accumulating more debt by trying to maneuver out of trouble.
“Sometimes, people will take a second mortgage to roll over credit cards. They think they’ve got a good deal,” said attorney Marjorie DeSanto Barlow, a Scranton lawyer. “People are buried with late fees and interest.
“It gets unmanageable. People in general don’t have as much money as they used to because all prices have gone up.”
Consumer prices in August were 5.4 percent ahead of year-earlier levels, with energy costs up 27 percent and food up 6 percent. Unemployment in the metro area hit 6.7 percent in August, a 10-year high.
Household debt is also climbing. Unpaid credit card bills in June were up 22 percent over the preceding June and average household credit card liability was $8,565, up 15 percent since 2000, according to reports by major credit card issuers.
“Many people overextended themselves with credit cards,” said Mark Walsh, a Scranton lawyer who handles bankruptcies. “As their necessary expenses continued to increase, their budgets fell apart.”
Bankruptcy filings surpassed 2 million cases in 2005, an all-time high, as debtors rushed to file before a law was enacted making it harder for people to file for protection under a “fresh start” provision that let them clear their debts.
New filings fell in 2006 and early 2007 before reversing course. Lawyers see more clients now who are overwhelmed by everyday expenses.
“I see your common person who has a credit problem because of increases of the costs of necessary items,” Mr. Walsh said.
Contact the writer: jhaggerty@timesshamrock.com
“Fuel went crazy and the (freight) rates never went up,” said Mr. Smith, 65, of Pittston, who was president of T.C. Smith & Sons Trucking Inc. “Our fuel bill was over $100,000 a month. Once you get behind one month, with the payments we had and all the equipment, you don’t catch up.”
T.C. Smith & Sons closed in April, furloughed its 25 employees and filed bankruptcy papers to liquidate its property and distribute the proceeds to creditors.
Bankruptcy case filings are climbing regionally and nationally. Rising unemployment and household debt and higher costs of living are spreading insolvency.
“With increasing economic problems and a larger number of Americans who can’t afford the credit they’ve taken on, it’s no surprise that bankruptcies are increasing,” said Travis Plunkett, legislative director for the Consumer Federation of America, a nonprofit association of public interest groups based in Washington, D.C.
Bankruptcy case filings for the year ended June 30 increased 29 percent nationally, 12 percent statewide and 21 percent in the regional U.S. Middle District of Pennsylvania, federal data show. Business bankruptcies soared 42 percent nationally, 21 percent statewide and 23 percent regionally during the same period.
T.C. Smith’s trouble started in the fall of 2006, when the company lost a $3 million hauling contract.
“We had 18 brand-new trucks,” Mr. Smith said.
Bankruptcy lawyers hear clients talk about accumulating more debt by trying to maneuver out of trouble.
“Sometimes, people will take a second mortgage to roll over credit cards. They think they’ve got a good deal,” said attorney Marjorie DeSanto Barlow, a Scranton lawyer. “People are buried with late fees and interest.
“It gets unmanageable. People in general don’t have as much money as they used to because all prices have gone up.”
Consumer prices in August were 5.4 percent ahead of year-earlier levels, with energy costs up 27 percent and food up 6 percent. Unemployment in the metro area hit 6.7 percent in August, a 10-year high.
Household debt is also climbing. Unpaid credit card bills in June were up 22 percent over the preceding June and average household credit card liability was $8,565, up 15 percent since 2000, according to reports by major credit card issuers.
“Many people overextended themselves with credit cards,” said Mark Walsh, a Scranton lawyer who handles bankruptcies. “As their necessary expenses continued to increase, their budgets fell apart.”
Bankruptcy filings surpassed 2 million cases in 2005, an all-time high, as debtors rushed to file before a law was enacted making it harder for people to file for protection under a “fresh start” provision that let them clear their debts.
New filings fell in 2006 and early 2007 before reversing course. Lawyers see more clients now who are overwhelmed by everyday expenses.
“I see your common person who has a credit problem because of increases of the costs of necessary items,” Mr. Walsh said.
Contact the writer: jhaggerty@timesshamrock.com
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