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"Bankruptcy trends spell trouble for NH" by Shawne K. Wickham (March 7, 2010) at UNIONLEADER.com:

http://unionleader.com/article.aspx?headline=
Bankruptcy+trends+spell+trouble+for+NH
&articleId=5339587e-b564-43df-8b35-16c198d755b5

'There were 505 bankruptcy filings in February, a historic high for that month in New Hampshire. It's the highest number since the bankruptcy laws were changed in 2005, and comes after a record January, when 381 bankruptcies were filed here.

Bankruptcy attorneys say they are bracing for an even busier period over the next several months.

That's because many people typically wait until they receive their federal tax refunds to file for bankruptcy protection, according to Sandra Kuhn, vice president of FamilyLegal law firm in Concord.

'They don't have the money to pay for the bankruptcy fee and the attorney fees, so a lot of times they use the refunds to do that,' she explained.

'I've been doing this a long time, and every year it gets busy at this time.'

Bankruptcy filings last year numbered 372 in February, 473 in March and 470 in April. The highest monthly total last year was July's, 494.

Kuhn isn't surprised that bankruptcy filings are at an all-time high. These days, many of her clients are unemployed and unable to find work.

'They're living paycheck to paycheck, and when they don't have that paycheck, they're spiraling out of control,' she said. Meanwhile, new mortgage data indicate the problem still may be getting worse.

The New Hampshire Housing Finance Authority last week reported that the 352 foreclosure deeds recorded in January set a new record for that month. That was second only to last October for the number of foreclosures recorded in any one month.

And the latest National Delinquency Survey by the Mortgage Bankers Association found that delinquencies continue to rise in New Hampshire, with 9 percent of all home loans past due in the fourth quarter of 2009. (Rates were not seasonally adjusted.)

In sheer numbers, 10,674 prime loans and 5,446 subprime loans in New Hampshire were delinquent at the end of last year, according to the MBA.

While New Hampshire has a lower overall percentage of subprime mortgages than other areas -- the NDS reported 16 percent of all home loans here are "nonprime," compared with a national average of 22 percent -- the delinquency rate for subprime mortgages, 30.35 percent, is actually higher here than the national average (27.77).

The state has the third-highest subprime delinquency rate in New England, behind Massachusetts (33.71) and Rhode Island (32.11).

Adjustable-rate subprime loans were the worst category, with 36.10 percent past due in the last quarter of 2009. That's the highest rate in New England, and well above the national average (29.34 percent).

The delinquency rate for prime loans in the third quarter of 2009 was 6.59 percent here, better than the New England average (6.75) and the national average (7.48).

The state's delinquency rate for FHA loans (9.97 percent) was the best in New England and far below the national average (14.82). But the rate of past-due VA loans here (8.88) was a bit higher than the national rate (8.24).

The psychological aspects of foreclosure and bankruptcy can seem even more difficult for many these days, according to Kuhn. While some national experts say the economy is improving, folks who are still unemployed or losing their homes aren't seeing any improvement.

'Then you think, 'Maybe there's something wrong with me',' she said.

Kuhn would like to see a moratorium on mortgage payments -- a kind of 'breathing room' -- for those who are jobless.

'It's really, really hard if you're unemployed, to be able sometimes to pay your mortgage,' she said. 'The thing is, nobody's getting jobs'..."

This is a situation that will get very ugly. Although the fundamental objective of bankruptcy is to give folks an opportunity to get "a fresh start," that isn't happening for many who are emerging from bankruptcy - still with a negative cash flow and/or still without a job.

- Ed Smith, Publisher
The EHS Letter Manual