The large number of business bankruptcies handled by local law firms is on the decline, a possible sign of an improving economy. However, the number of personal bankruptcy cases continues to rise.

A total of 14,215 bankruptcies were filed in Middle Tennessee in 2010, compared to 14,988 in 2009. Those numbers are nearly double the 7,864 bankruptcies filed in 2006 but similar to the 14,603 bankruptcies filed during the 2001 recession.

In 2010, Tennessee ranked second only to Nevada in bankruptcies filed with more than 10,000 filings per million individuals, National Bankruptcy Research Center statistics show.

Across the country, bankruptcy filings remain at a five-year high, climbing 8 percent in 2010, data from the Administrative Office of U.S. Courts reveals. In 2010, there were 56,282 business bankruptcies and 1.5 million non-business bankruptcies, for a total of 1.6 million. In 2009, there were 60,837 business and 1.4 million non-business bankruptcies, for a total of 1.5 million.

The number of bankruptcies during each of those two years was certainly much higher than in 2006, which was the first full 12-month period after the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) became effective.

In 2006, there were 19,695 business and 597,965 non-business bankruptcies, for a total of 617,660. Although a huge number of bankruptcies were filed during the recent recession, the historic high was reached in 2005 when more than 2 million bankruptcies were filed, many of them to skirt the changes BAPCPA would bring.

Numbers for January through March 2011 numbers show declining numbers for Middle Tennessee. There were 22 Chapter 11 filings during that period compared to 39 in 2010. There were 1,269 Chapter 13 filings compared to 1,273 in 2010.

Drescher & Sharp’s commercial bankruptcy practice saw a sharp increase in business during the last half of 2007 through 2009, partner Bryan Pieper says. With the recession going on longer than anyone anticipated, companies began running out of money, he adds. Some filed bankruptcy. Some simply closed their doors.

To meet demand, Drescher & Sharp hired more staff, put in longer hours, added part-time attorneys and shifted staff lawyers from real estate and commercial litigation to bankruptcies.

During the last half of 2010, bankruptcy demands eased. “The economy certainly hasn’t fully recovered,” Pieper says, “but judging from how active our corporate clients are, the worst appears to be over.”

Bradley Arant Boult Cummings experienced a similar spike in bankruptcies but didn’t hire additional attorneys. It probably should have, says William Norton, a member of the firm.

“We were generally drawing from other attorneys in other areas like litigation and real estate and banking that were slower at the time,” Norton explains. “So we were able to kind of fill our needs from within.”

Much of the Chapter 11 cases Norton is handling have now been resolved. The companies are either out of bankruptcy or their assets were sold and the bankruptcy is not needed anymore.

“So what I’ve been doing lately is just kind of wrapping those cases up, finishing them to their conclusion,” he says. “And there haven’t been any significant new cases; none that I’ve actually filed in this last six months. As the cases wrap up, the workload gets back to normal.”

Construction bankruptcies also may be waning, says Curtis Harrington, an associate at Lassiter Tidwell Davis Keller & Hogan. He has heard that builders are buying lots again instead of just scanning the foreclosure market.

The outlook isn’t as good for personal bankruptcies.

Edgar Rothschild’s firm Rothschild & Ausbrooks has seen a jump in personal bankruptcy cases in 2008, 2009, and 2010. The firm increased its attorney count to four and expects to add another attorney next year. Attorneys and staff have worked more hours to handle the bigger workload.

L.G. “Buddy” Burnett Jr., who also has experienced an uptick in the number of personal bankruptcy filings at his firm, says the federal government’s Home Affordable Modification Program (HAMP), which essentially tries to slow the number of foreclosures and assist people that were in bad mortgage loans, doesn’t seem to be helping much.

Burnett has had several clients who were months behind on mortgages and unsuccessful in attempting loan modifications. Some clients had adjustable rate mortgages they could barely afford and were unable to meet rate increases. Many filed Chapter 13 in order to catch up on their mortgages.

Job cutbacks also have forced many to file, Burnett says. Many built budgets on 40- to 45-hour work weeks that were cut back.

“We’re still filing bunches of bankruptcy cases,” Burnett says. “There are a lot of people out there that are still really hurting.”