Bankruptcy filings ticked up in Nebraska in 2019 for the second year in a row.
There were 4,128 filings of all types last year, up about 2% from 2018 and the highest total since 2015.
Despite a continued strong economy and low unemployment, bankruptcies have been on a slow increase in Nebraska since hitting a 22-year low in 2017.
Sam Turco, a bankruptcy attorney in both Lincoln and Omaha, said there is a "big disconnect" between the top 40% of the economy and the bottom 60%.
"The top 40% just doesn’t get what is happening out there, and the trend is not good," Turco said in an email. "The middle class is eroding, and that’s in a 'good' economy."
For that bottom 60%, he said, many have not recovered from the last recession, and they face flat wages. In addition, "housing expenses are high, medical insurance costs keep increasing, and health coverage is slipping. Combine that with out-of-control student loan debt levels, and they just can’t move forward."
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Turco said another big factor in people struggling financially is frequent job changes, during which they may lose health insurance and some may choose to cash in retirement plans. People getting hit with a medical crisis while they are uninsured or underinsured is a big factor in many bankruptcies.
A more troubling trend than the overall rise in bankruptcies is the increase in Chapter 11 and Chapter 12 filings.
Chapter 11 is a category that allows reorganization of debts by those with higher levels of assets and often is used by businesses. There were 42 such filings in Nebraska last year, up from 26 in 2018, and the highest level since 2010.
Turco said he thinks the Chapter 11 numbers are in large part due to retailer bankruptcies, such as the one for Shopko, which was filed in Nebraska.
"Retail businesses are getting killed by online sellers like Amazon," he said.
Chapter 12 bankruptcies cover agricultural operations, and they have been rising steadily for the past few years as low commodity prices and higher input prices have put a squeeze on profits.
There were 41 Chapter 12 filings in the state last year, up from 27 in 2018 and 20 in 2017. It was the highest number since 2003.
"It's a bit less than I would have anticipated," said Creighton University economist Ernie Goss.
Goss said he thinks federal subsidies given to farmers to make up for losses due to trade wars with China and other countries helped to keep more from going under.
From September 2018 to August 2019, Nebraska agricultural producers received $694 million in Market Facilitation Payments.
Goss said passage of the United States-Mexico-Canada Agreement and the Phase One trade deal with China will be good for Nebraska farmers, but it still remains to be seen whether they can start growing exports again.
"I think 2020 is going to be a real watershed year," he said.
Nationally, bankruptcy numbers were up slightly. Both overall filings and Chapter 11 filings rose less than 0.5% from 2018-2019, according to the American Bankruptcy Institute. Chapter 12 bankruptcies rose 24% nationally from the third quarter of 2018 to the third quarter of 2019, according to the American Farm Bureau Federation.