When it comes to personal bankruptcy filings, Utah no longer holds the title of Insolvency Capital of the Nation.

In fact, at one filing per 39.5 households in 2005, the Beehive State fell to a No. 3 ranking among all 50 states and the District of Columbia for the 12 months ended Dec. 31, according to a report released Monday by the American Bankruptcy Institute, a Virginia-based nonpartisan organization dedicated to research and education on bankruptcy issues.

For three straight years — 2002 to 2004 — Utah ranked No. 1 in the U.S. in households per consumer filing. At its height in 2003, roughly one in 36.6 Utah households filed for bankruptcy, according to the institute.

However, in 2005, Indiana took the top spot for bankruptcy filings at one filing for every 34.4 households. Ohio was second at one filing per 37.2 households. South Carolina had the lowest ranking, with one filing per 123.2 households.

Nationally, one of every 60.2 households filed for bankruptcy in 2005, a dramatic rise from one of every 78.5 households in 2004, mainly because of a stampede of filers seeking to beat a new bankruptcy reform law that went into effect last October that made it more difficult to declare insolvency.

Jeff Thredgold, president of Salt Lake-based Thredgold Economic Associates and an economic consultant to Zions Bank, was surprised Utah did not rank lower.

"I suspect when you look at data for 2006, we'll probably be in the 8th-to-the-15th range," Thredgold said. "Utah's economy is very strong. We're fourth in the country in job growth. Home-price appreciation is dramatically stronger than it was."

States like Indiana and Ohio, Thredgold said, are showing weakness in home-price appreciation and have experienced tens of thousands of layoffs in the manufacturing sector.

Samuel Gerdano, ABI executive director, said bankruptcy filings will decline dramatically this year, perhaps by as much as 40 percent to 50 percent.

"My guess is they will come in under 1 million total filings nationally for the calendar year of '06," Gerdano said. "We haven't been at that number in six or seven years."

According to ABI, the top five reasons people file for bankruptcy are ease of obtaining personal credit and credit cards, loss of a job, financial mismanagement, medical problems and divorce.

In Utah, economists maintain, the reasons extend to larger family size, higher charitable contributions and lower-than-average per-capita income levels.

In spite of projected lower filings in 2006, Gerdano maintains U.S. families remain under a high level of financial stress.

"The underlying economic problems are still there," Gerdano said. "Households are living too close to the edge. They're very susceptible to any kind of interruption in their income stream, and the law can't change that. The law just deals with the symptoms of financial problems. It can't get you a job, and it's foolish to think that it was going to have any impact on those underlying economic realities."

---

E-mail: danderton@desnews.com