Whatcom bankruptcies down, but financial stress remains

Whatcom County bankruptcy filings have fallen to pre-recession levels, but that doesn’t mean financial distress has gone away.

There were 398 Whatcom County residents who filed for bankruptcy last year, according to data from the U.S. Bankruptcy Court Western District. It’s the lowest annual total since 2006 and is about half the total of 808 in 2010.

Whatcom County bankruptcies increased sharply in 2007 and 2008 ahead of the global financial meltdown at the end of 2008. Bankruptcy filings locally have decreased every year since 2010.

While an improving economy is a factor for the decrease, the sad reality for many is that bankruptcy is not a good option if they have no assets like a house or stocks to protect, said Tom Lester, a Bellingham bankruptcy attorney for the law firm Lester & Hyldahl.

Since people can only file for Chapter 7 personal bankruptcy once every eight years, they need to be careful when they do – if people file and they don’t have assets to protect, they may find themselves in the same debt situation before eight years have past, Lester said

“If you are in a house and the bears are at the door, you don’t want to waste that one shot,” Lester said.

For those saddled with debt and haven’t filed for bankruptcy, one piece of advice from Lester is to not ignore court paperwork. If those court papers are ignored and a default judgment is rendered, it could mean garnished wages, leaving a person in worse financial shape, he said.

While bankruptcies related to medical expenses still are common, Lester said he has seen such filings less frequently than before the Affordable Care Act was enacted.

Dave Gallagher: 360-715-2269, @BhamHeraldBiz