U.S. bankruptcy filings drop to a 20-year low

The total number of U.S. bankruptcies filed during this year's first quarter fell to 116,771, the lowest on record in more than 20 years, according to the American Bankruptcy Institute and data from the Administrative Office of the U.S. Courts.

The 2006 first quarter filings represent an 82.5 percent drop from the fourth quarter of 2005, when 667,431 new cases were filed. It also represents a 70.9 percent drop from 401,149 filings in the first quarter of 2005.

The U.S. Bankruptcy Court for the District of Utah was among the five districts in the nation showing the highest percentage decrease in total filings for the 12-month period ending March 31. Filings in Utah during that period fell 12.05 percent.

Fears about the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which went into effect Oct. 17, motivated thousands of people to file for bankruptcy before the new reforms went into effect. Since the act's passage, filings have slowed to a trickle.

For instance, the number of bankruptcy filings in Utah from Jan. 1 through April 30 decreased by 79 percent compared to the same four-month period a year ago.

And Utah, which for three straight years — 2002 to 2004 — ranked No. 1 in the United States in households per consumer bankruptcy filing, now ranks No. 3 among all 50 states and the District of Columbia for the 12 months ended Dec. 31, 2005.

"Congress hoped the new law would reduce the number of new consumer bankruptcies, and the latest figures reflect that intention, though there are still many families under financial stress," Samuel Gerdano, ABI executive director, said in a statement released Friday. "We haven't seen numbers this low since the mid-1980s."

Economists also contribute the fall in filings to a robust economy.

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