laz
10-13-2004, 11:14 AM
First in 10 years: If the decrease continues through year's end, it will reverse the state's upward trend
By Steven Oberbeck
The Salt Lake Tribune
For the first time in nearly a decade, Utah is poised to report a significant annual decline in the number of its residents filing for bankruptcy.
The U.S. Bankruptcy Court for Utah reported Wednesday that the number of Utahns who declared themselves insolvent during the first nine months of 2004 declined 5 percent, a trend that if continued through the rest of this year could signal a reversal in the state's decadelong climb in bankruptcy filings.
"So far this year, we've seen fewer filings every month, although the rate of decline was a lot stronger during the first half," when the number of bankruptcy petitions was down 7 percent, U.S. Bankruptcy Court clerk William Stillgebauer said. "Still, it is nice to see the numbers going down instead of up."
Utah last saw a significant decline in its annual bankruptcy numbers in 1994 when filings dropped 4 percent compared with the previous year.
The decline in bankruptcy petitions this year coincides with the state's slow recovery from the nationwide economic downturn. "You'd expect as the economy improves that the number of bankruptcies would go down," said Mark Knold, senior economist with the Utah Department of Workforce Services.
Nationally, the number of bankruptcies is declining as well.
The Administrative Office of the U.S. Courts in late August reported that the total number of bankruptcies filed in federal courts declined 1 percent in the 12-month period ended June 30, 2004.
And the total number of filings submitted to federal bankruptcy courts during the second quarter of 2004 was down 4.3 percent compared with the April-through-June period in 2003.
"Consumer bankruptcy filings appear to have turned a corner," said Sam Gerdano, executive director of the nonprofit American Bankruptcy Institute.
While bankruptcy numbers are still high, improving economic conditions and low interest rates have allowed more families to clean up their household finances, Gerdano said, noting that businesses, too, are reaping the benefits of low interest rates.
Gerdano, however, pointed out that consumer spending and personal debt levels remain high nationwide.
Until those two factors are brought under control, the chance of a significant, long-term decline in bankruptcy numbers remains remote.
Bankruptcy experts consistently blame the almost steady increase in personal bankruptcies in Utah and the nation over the past decade on the easy availability of credit, unexpected medical expenses, divorce and unforeseen job losses.
The majority of the bankruptcy filings in Utah seek protection under Chapter 7 of the U.S. Bankruptcy Code, which results in the court appointing a trustee to auction off a portion of the debtor's assets. The proceeds of the auction are distributed to creditors.
Figures released Wednesday by the U.S. Bankruptcy Court for Utah indicate that 70 percent of the 15,931 bankruptcy petitions filed so far this year sought Chapter 7.
The remaining 30 percent of petitioners asked to reorganize their finances under Chapter 13, which allows debtors to repay their obligations over time
By Steven Oberbeck
The Salt Lake Tribune
For the first time in nearly a decade, Utah is poised to report a significant annual decline in the number of its residents filing for bankruptcy.
The U.S. Bankruptcy Court for Utah reported Wednesday that the number of Utahns who declared themselves insolvent during the first nine months of 2004 declined 5 percent, a trend that if continued through the rest of this year could signal a reversal in the state's decadelong climb in bankruptcy filings.
"So far this year, we've seen fewer filings every month, although the rate of decline was a lot stronger during the first half," when the number of bankruptcy petitions was down 7 percent, U.S. Bankruptcy Court clerk William Stillgebauer said. "Still, it is nice to see the numbers going down instead of up."
Utah last saw a significant decline in its annual bankruptcy numbers in 1994 when filings dropped 4 percent compared with the previous year.
The decline in bankruptcy petitions this year coincides with the state's slow recovery from the nationwide economic downturn. "You'd expect as the economy improves that the number of bankruptcies would go down," said Mark Knold, senior economist with the Utah Department of Workforce Services.
Nationally, the number of bankruptcies is declining as well.
The Administrative Office of the U.S. Courts in late August reported that the total number of bankruptcies filed in federal courts declined 1 percent in the 12-month period ended June 30, 2004.
And the total number of filings submitted to federal bankruptcy courts during the second quarter of 2004 was down 4.3 percent compared with the April-through-June period in 2003.
"Consumer bankruptcy filings appear to have turned a corner," said Sam Gerdano, executive director of the nonprofit American Bankruptcy Institute.
While bankruptcy numbers are still high, improving economic conditions and low interest rates have allowed more families to clean up their household finances, Gerdano said, noting that businesses, too, are reaping the benefits of low interest rates.
Gerdano, however, pointed out that consumer spending and personal debt levels remain high nationwide.
Until those two factors are brought under control, the chance of a significant, long-term decline in bankruptcy numbers remains remote.
Bankruptcy experts consistently blame the almost steady increase in personal bankruptcies in Utah and the nation over the past decade on the easy availability of credit, unexpected medical expenses, divorce and unforeseen job losses.
The majority of the bankruptcy filings in Utah seek protection under Chapter 7 of the U.S. Bankruptcy Code, which results in the court appointing a trustee to auction off a portion of the debtor's assets. The proceeds of the auction are distributed to creditors.
Figures released Wednesday by the U.S. Bankruptcy Court for Utah indicate that 70 percent of the 15,931 bankruptcy petitions filed so far this year sought Chapter 7.
The remaining 30 percent of petitioners asked to reorganize their finances under Chapter 13, which allows debtors to repay their obligations over time