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Tuesday, May 17, 2022

Bankruptcies Down in L.A. as They Rise Elsewhere

Bankruptcies Down in L.A. as They Rise Elsewhere

By AMANDA BRONSTAD

Staff Reporter

Steadily rising home values and a solid job base helped Los Angeles buck a nationwide trend that saw a record number of Americans file for bankruptcy protection last year.

Consumer bankruptcies in the Central District of California, which includes L.A. County, fell by 4.8 percent in 2002, even as they rose by 6 percent nationally, to 1.5 million, according to a report from the Administrative Office of the U.S. Courts.

There were 81,702 consumer bankruptcy filings in the Central District of California in 2002, about 97 percent of all filings for the local court. The decline followed a 9 percent increase in 2001 and marked the first time in five years that the L.A. region defied nationwide trends in bankruptcy filings.

Real estate made the difference.

“Home prices have been rising fairly dramatically, while interest rates have been falling,” said Nancy Sidhu, senior economist with the L.A. Economic Development Corp. “People who are worried or see themselves in trouble have been refinancing and paying down those debts. In other parts of the nation, this continues to be true, but in many parts, prices have not been rising as fast as they have here.”

In the Southern District of New York, which includes New York City, there were 14,811 consumer bankruptcies in 2002, up 8.3 percent from a year earlier.

The survey also found that bankruptcy filings in the Northern District of California were 20,139 in 2002, up 8.1 percent from 2001.

Howard Roth, chief economist for California’s Department of Finance, said the higher rate of bankruptcies in Northern California could be attributed to the decline of the technology industry. As jobless levels have jumped, younger people who do not own homes and have few assets are more likely to file for bankruptcy, he said.

Some bankruptcy lawyers do not anticipate an increase in L.A. any time soon.

“The consumer filings in L.A. County dropped so substantially that out of necessity it forced me to reinvent my practice and focus on civil litigation,” said Baruch Cohen, a local bankruptcy attorney who handled only consumer bankruptcies two years ago. Today, bankruptcies make up only 10 percent of his work.

According to the Administrative Office survey, the increase in filings started to tail off nationally at the end of 2002, as total filings fell by 1.5 percent in the last three months of the year compared to the previous quarter.

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