Bankruptcy filings jumped nearly 36 percent in Maryland in the past year, continuing a recession-era trend of double-digit growth in cases, a federal courts report shows.
The increase in Maryland, including business and individual bankruptcy cases, outpaced the 20 percent increase in filings nationally in the year that ended June 30, according to statistics released recently by the Administrative Office of the U.S. Courts. More than 29,000 bankruptcy cases were filed in Maryland in that time, the report shows.
Bankruptcy filings have risen in Maryland since the recession began in late 2007. About 11,200 cases were filed that year, with the number rising 46 percent in 2008 and more than 30 percent in 2009.
"Clearly the uptick in filings now is really a shakeout of this very difficult economy," said Joel L. Perrell Jr., an adjunct professor at the University of Maryland School of Law and a principal with Miles & Stockbridge PC. "As you hear more bad economic news, it seems the bankruptcies seem to trend upwards. And we're still dealing with the shakeout from all the problems in the housing market."
Maryland's per-capita bankruptcy rate ranks in the middle of the pack compared with the rest of the country. The state had the 21st highest rate of bankruptcies, with 5.1 filings per 1,000 people. Nationally, 1.6 million bankruptcy cases were filed in federal courts in the latest 12-month period, compared to 1.3 million cases filed in the year that ended June 30, 2009.
According to the report, the number of cases filed in the most recent period marked the highest number since 2005, when the biggest overhaul of the bankruptcy court system in decades took effect. Those changes, which were aimed at people who abused the system, created more hurdles for individuals seeking to clear debt through bankruptcy.
The number of bankruptcy cases filed in the past year in the state has returned to levels that were typical before October 2005. But over the past couple of years the numbers have again begun to creep up.
Non-business filings accounted for the majority of the cases nationally in the most recent 12-month period, with 1.5 million such cases filed. In Maryland, individuals also filed most of the cases, as businesses accounted for just 898 cases. In the past year, real estate developers and companies frequently have been among the business filings, Perrell said.
Most of the cases, whether by individuals or businesses, chose protection through Chapter 7, in which non-exempt property is liquidated and the proceeds distributed to creditors.
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