Bankruptcy filings in Utah keep falling

Bankruptcy filings in Utah continued to fall during the first half of 2004.

According to the U.S. Bankruptcy Court for the District of Utah, consumer and business filings dropped to 10,591 for the six months ended June 30, a 7 percent decrease from 11,348 filings during the same period in 2003.

Local economists attribute the drop to an improving economy and new job growth.

More than two-thirds of filings so far in 2004 have been under Chapter 7, a provision that liquidates assets and allows unsecured debts, like credit-card balances, to be dismissed.

Nearly one-third of other filings this year were made under Chapter 13, which allows individuals to reorganize their debts and pay creditors over a three- to five-year period.

Only a handful of filings — 25 — fell under Chapter 11, which deals with the reorganization of businesses.

Just for June, Utah filings increased slightly to 1,781 compared to 1,755 during the same month last year.

While Utah's bankruptcy filing rate has been declining over the past 18 months, the state continues to hold the highest households-per-filing rate in the nation, according to a report released in June by the Virginia-based American Bankruptcy Institute.

According to the report, one of every 36.5 Utah households filed for bankruptcy during the 12 months ended March 31. Nationally, one of every 72.8 households filed for bankruptcy during the same period.

Reasons for Utah's high filing rate have been attributed to larger family size, higher charitable contributions and lower-than-average per-capita income levels.

Kevin Anderson, standing Chapter 13 trustee in Salt Lake City, recently told the Deseret Morning News that another reason for Utah's high filing rate may come from repeat filers.

"Yes, we have a substantial number of refilers," Anderson said. "We've done a lot of looking into why people are refiling, and it's the same thing that caused them to file in the first place — they lose a job, they get sick and don't have good insurance or they get divorced."

Individuals can file multiple times for bankruptcy, often under different chapters.

"If they can establish to the court's satisfaction that they have had a string of bad luck, they can refile," Anderson said. "If you act in bad faith or act fraudulently the debt can be denied a discharge."

Anderson added that a Chapter 7 filer is limited to a bankruptcy discharge once every six years.

According to the ABI report, household debt reached $8.9 trillion in 2003, a record high relative to disposable income.

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E-mail: danderton@desnews.com