Bankruptcies decline 8%

Utah's bankruptcy filings dropped for the three months ended March 31, down nearly 8 percent compared to the first quarter of 2003.

During the most recent quarter, 5,112 filings were processed by the U.S. Bankruptcy Court for the District of Utah, down from 5,539 filings during the same period a year ago.

Nearly three-quarters of Utah's filings were made under Chapter 7, a provision that liquidates assets and allows unsecured debts, like credit-card balances, to be dismissed.

The other quarter of Utah's filings fell under Chapter 13, allowing individuals to reorganize their debt and pay creditors over a three- to five-year period of time.

Only a handful of filings — five — fell under Chapter 11, which deals with the reorganization of businesses.

Filings in March this year did rise slightly to 2,081, compared to 2,075 in March 2003. But numbers were down in January and February of 2004, compared to last year.

Since July, bankruptcies in the state have shown a downward trend, following 2002's record 22,052 filings, the largest number in a one-year period in the state's history. Local economists attribute the slowdown to an improving economy.

Jeff Thredgold, president of Thredgold Economic Associates and an economic consultant to Zions Bank, recently said the decrease in bankruptcies shows more evidence that Utah's economy is on the mend.

Thredgold also said the slowing filing rate is indication of a trend despite one or two months showing a slight uptick in filings, like March.

Filings fell 0.6 percent from 2002 to 2003, the first time since 1994 that bankruptcies declined.

Still, in 2003 one of every 36.6 Utah households filed for bankruptcy, the highest households per filing rate in the nation, according to the Virginia-based American Bankruptcy Institute. Utah's rate is nearly double the national rate of one filing per 73.1 households.

Experts attribute Utah's high filing rate to the state's larger than average family size, higher than average housing prices and lower than average per capita income.

According to Harvard professor Elizabeth Warren, a leading bankruptcy expert, the modern single-earner family faces a 60 percent drop in discretionary income compared with its one-income counterpart of a generation ago.

Nationally, according to a study commissioned by the American Bankruptcy Institute, the top five reasons people filed for bankruptcy included ease of obtaining personal credit and credit cards, loss of a job, financial mismanagement, medical problems and divorce.

Outstanding balances on credit cards, according to ABI, accounted for 5.65 percent of disposable income in 1990, increased to 9.79 percent in 2001 and are expected to reach 11.92 percent by 2010.

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E-mail: danderton@desnews.com