From the Record:
The number of bankruptcies in New Jersey surged by more than 40 percent over the last year as recession-battered consumers struggled with debts and job losses while businesses suffered shrinking revenue.
Personal and business bankruptcies rose to 3,269 statewide in July, up 44 percent from the same month in 2008, according to the latest figures available from U.S. Bankruptcy Court in New Jersey.
In Bergen County, personal bankruptcies rose even faster – 63 percent higher in July than a year earlier. Passaic County personal bankruptcies in July were up 59 percent over July 2008.
Personal bankruptcies accounted for about 95 percent of the state’s filings in July, court records show. About three-quarters of these were Chapter 7 filings, in which the filer does not seek to restructure debts but goes straight into liquidation.
In the 12 months ending July 31, business bankruptcies increased by 37 percent in Bergen and fell by 6 percent in Passaic over the prior 12 months. Seventy percent of the business filings in the period were Chapter 7 cases.
Bankruptcy attorneys said the numbers weren’t surprising given the poor economy. They cited mortgage problems and health care bills as the main factors behind most personal bankruptcies.
“We are not just talking about sub-prime at this point,” said Eric R. Perkins, a Ridgewood bankruptcy attorney. “You are [also] talking about properties that were appraised very high so that they could cash out.
“So now they have to pay these mortgages and they have either lost their jobs (or) their income has been reduced,” he said.
Jay B. Yacker, a Fort Lee bankruptcy attorney, said about 70 percent of his cases stem from real estate debt, where a few years ago 70 percent came from credit card debt.
“When the real estate market goes down it seems like the bankruptcies go flying up,” he said.
Sirota said he doesn’t expect the figures to improve soon, even if the economy does.
“The companies that are suffering have been suffering for a while,” he said. “And depending on the circumstances (they) can only hang in so long, before they need a relief of a bankruptcy proceeding. The economy may not come back fast enough to save businesses that are in varying degrees of distress.”