Bankruptcy Filings Increase in Oklahoma

Medical expenses and divorce are the primary reasons for an increase in bankruptcy filings in Oklahoma last year, officials said.

Bankruptcy filings increased in all three of the state’s federal court districts by between 22 percent and 25 percent, according to data examined by the Tulsa World.

“It’s been growing,” said Michael Williams, bankruptcy clerk for the Northern District Court in Tulsa, where bankruptcy filings rose 24 percent to a total of 3,127. “I’m sure we haven’t leveled out yet, especially since October was really high, and November was higher than in the previous year.”

The rise in bankruptcy filings is an additional indicator of a tough local economy, which includes a decade-high number of foreclosure filings, a three-year high in unemployment, a 20 percent increase in 211 calls and a consecutive six-month rise in Oklahomans receiving food stamps.

“I’m sure it’s tied to the economy,” Williams said. “But on a day when the economy is bad may not be a day with a lot of bankruptcy filings. There is sometimes delay, and bankruptcies are semi-erratic and cyclical. It goes up and down.”

In 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act was passed and is credited with causing an all-time high of nearly 11,000 filings that year in Tulsa. The reform established tighter income limits and set a new standard for measuring a debtor’s ability to repay.

Since then, filings have been significantly lower, but the numbers have consistently been creeping up.

“The original impact was that it scared everyone into filing and then scared people from filing after the rules took effect,” Williams said. “Now, people are getting back into it, and attorneys are getting back into it. I don’t know if we will ever truly see what the impact was.

“As far as numbers, it’ll keep growing. I expect to have about 5,000 by the end of the year.”

The 2005 rules require filers to take a bankruptcy counseling course at the beginning of the process and a financial literacy course at the end.

Consumer Credit Counseling Service, a nonprofit group in Tulsa, is among the organizations accredited to offer the courses.

“On the counseling front side, they have a lot of stress,” said Executive Director Margo Mitchell. “Most have already met with an attorney and paid the fee, so they’ve made up their mind.

“But before being discharged, they take a financial literacy course, and that will have an impact. They have gone through the court process and feel like they have a clean slate and are more willing and accepting. They have a fresh start and don’t want to make that mistake a second time.”

Mitchell said medical expenses have become a dominant factor in bankruptcies and are affecting more retired and older people. She said a recent divorce is another frequent reason.

Unemployment has not been a common reason for bankruptcy among the nonprofit’s clients, she said.

“One thing that makes me extremely sad is seeing more and more seniors filing for bankruptcy,” Mitchell said. “They are using credit cards to supplement income. That snowballs and catches up with them. They use them for basic living expenses or medical bills. It is our fastest-growing group of bankruptcy filers.

“It is sad because seniors should be in their golden years and not going through the financial stress of bankruptcy. Medical is a big factor we are seeing.”

Information from: Tulsa World, www.tulsaworld.com