More wealthy individuals in the Nashville area are filing Chapter 11 bankruptcy this year, the code typically associated with business reorganizations, in some cases because they got in over their heads on real estate deals. Nationally, individual Chapter 11 bankruptcy filings jumped 73% in the second quarter from a year earlier.
So far this year, more Chapter 11 non-business cases have been filed in Middle Tennessee than all of last year, according to the U.S. Bankruptcy Court of the Middle District of Tennessee. Thirty-nine personal Chapter 11 cases have been filed in 2009, compared with 11 by this time last year. Local attorneys say they’re seeing owners of real estate companies and large developers, as well as people involved in the auto industry, seek Chapter 11, a smart more expensive and time-consuming for debtors and creditors than the standard Chapter 7 liquidation release.
Overall, the total number of U.S. bankruptcies filed during the first half of the year is up 36 percent over the same period last year, according to the Administrative Office of the U.S. Courts. Job loss, divorce, illness or injury with little or no insurance coverage are among leading reasons why people file for bankruptcy, said Nashville bankruptcy lawyer Maria Salas of Salas Law Group.