SACRAMENTO — Bankruptcy filings in the Central Valley soared to an all-time high in 2009, up nearly 50 percent from 2008, figures from the U.S. Bankruptcy Court show.
In a region battered by recession, plunging home values, foreclosures, state government furloughs and double-digit unemployment, "we're busier than we've ever been," said Richard Heltzel, clerk of the Sacramento-based U.S. Bankruptcy Court for the Eastern District of California.
The tally: 45,924 bankruptcy cases filed in the district's federal courthouses in Fresno, Modesto and, the busiest, Sacramento, where nearly 29,000 of the cases were filed.
In 2008, more than 31,000 cases were filed in the Eastern District's courts -- a 79 percent jump from the nearly 17,400 cases filed in 2007.
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That's not surprising considering economic conditions in the state, especially the Northern San Joaquin Valley counties of Stanislaus, Merced and San Joaquin.
The number of foreclosures in the region are at or near the top for the country. As the valley housing market tumbled from its peak in late 2005 amid a flood of subprime loans and overinflated prices, homeowners increasingly were burdened with declining values and rising payments.
Once the recession took hold, businesses began cutting back. Jobs in real estate and related fields began disappearing. Soon furloughs and job losses spread to other sectors of the economy.
Valley unemployment reached levels not seen in more than a decade, topping 17 percent and predicted to go as high as 20 percent before the economy turns around later this year or sometime in 2011.
Heltzel predicted that the Central California district would break the 30,000-case barrier in 2008 and the 40,000-mark in 2009.
But he takes no pride in his predictive powers amid the long losing streak that has gripped the Eastern District, a 33-county territory that stretches from the Oregon state line to the Tehachapi mountains.
"A lot of jobs were lost in this district," Heltzel said. "State employees had a 15 percent pay cut by virtue of furloughs. A lot of them were on the edge before the pay cuts.
"There are so many foreclosures in neighborhoods. You take all of these factors and add them together, and that's the main reason behind the filings."
Attorney Jonathan G. Stein also cites foreclosures as a main factor among filers seeking his help.
"It's a combination of things: The cases are foreclosure-related; they're frustrated with their lack of ability to pay their bills," Stein said. "The banks are promising that they will stop foreclosure sales, but they're not. One way to stop a foreclosure is to file for bankruptcy."
The story is familiar across the country.
U.S. consumers and businesses are using bankruptcy filings at a near-record pace.
In all, 1.43 million filings were logged in 2009, The Associated Press reported. That's 32 percent higher than 2008 and the seventh-worst year on record, behind only 1998 and the years 2001 through 2005.
Filings statewide in California were 58 percent higher than in 2008. Only Nevada, Wyoming and Arizona, at 77 percent, saw sharper hikes, according to the AP.
It's a grim scenario that may worsen in 2010.
Heltzel expects as many as 20 percent more filings in 2010, saying the next wave could be tied to the sagging commercial real estate market, taking down businesses and the people who work for them.
"We're all expecting the numbers to continue to creep up," he said. "It wouldn't surprise me."
Modesto Bee City Editor David W. Hill contributed to this report.