Valley bankruptcies fell again in May: Consumer-debt problems continued to ease in May, with Valley bankruptcies declining for a fourth straight month. 
Russ Wiles/The Arizona Republic
7 June 2011

The U.S. Bankruptcy Court reported 2,472 filings last month in metro Phoenix, representing a 10 percent drop from April and nearly 11 percent from May 2010.

"It's definitely softening, and it's a function of people not incurring as much consumer debt over the last 12 to 24 months," said bankruptcy attorney Pernell McGuire of Tempe law-firm McGuire Gardner, a division of Davis Miles PLLC.

Daniel Zuckerman, a certified financial counselor at GreenPath Debt Solutions in Tempe, said he had noticed a similar situation.

"We're definitely seeing a trend of fewer people needing help with a bankruptcy," said Zuckerman, whose company provides pre-bankruptcy counseling and help on debt issues involving credit cards, student loans, home loans, reverse mortgages and more.

Chapter 7 filings, which allow debtors a fresh financial start after non-exempt assets are used to pay creditors, accounted for 86 percent of bankruptcies last month. Chapter 13 debt-reorganization plans accounted for most of the rest, but fell by nearly one quarter compared with May 2010.

The statewide situation showed similar patterns, with Arizona bankruptcies dropping 11 percent and Chapter 7 filings accounting for more than four in five of the overall total.

Nationally, consumer bankruptcies in May fell 16 percent from May 2010, according to the American Bankruptcy Institute and National Bankruptcy Research Center. The 114,803 nationwide filings last month reflected a decline of 15 percent from April.

"The continued drop in bankruptcies during 2011 reflects the pullback in consumer credit over the past year and a reduction in household debt," the ABI's executive director, Samuel Gerdano, said in a statement.