Utah sees big drop in filings of bankruptcy

Utah's bankruptcy filings were down 77 percent through June compared to the first six months of 2005, the U.S. Bankruptcy Court for the District of Utah reported Thursday.

That percentage decrease outpaced a similar drop in national bankruptcy filings, which were down 69 percent in the second quarter.

Utah had 457 bankruptcy filings in June, compared to 426 in May and 470 in April. In June last year, the bankruptcy court reported 1,684 total filings.

For the first six months of 2006, Utah has had 2,368 filings, compared to 10,295 during the same period of 2005.

"Since the beginning of the year, we have seen a slight increase in filings," said David Sime, clerk of the U.S. Bankruptcy Court for the District of Utah. "We were at 18 percent of filings in January, as compared to last year. As of the end of June, we are at 23 percent of filings as of the six-month period, compared to last year."

Bankruptcy figures for the past year have been skewed, likely because many Americans rushed to file before the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 went into effect on Oct. 17.

Nationally, second-quarter filings fell to 142,815 from 458,991 a year earlier, according to Lundquist Consulting, a Burlingame, Calif., firm that collects data from U.S. bankruptcy courts. The figure was 39 percent higher than the first-quarter total.

"Almost everybody expects long-term filing rates to settle lower, but it's too early to say where," said Christopher Lundquist, the firm's president. "The bill didn't put any money into anyone's pocket, so the question is whether distressed borrowers end up in credit counseling or there are contractual charge-offs. You may have better recoveries and lower losses."

Lundquist Consulting, which has been compiling data on personal bankruptcy filings since 1994, said the daily average for filings in June was 2,272 per day, down from a typical 5,000 to 6,000.

In June, the Utah bankruptcy court received 310 Chapter 7 bankruptcy filings, 145 Chapter 13 filings and two Chapter 11 filings.

"There's a mix of Chapter 7 and Chapter 13 (bankruptcy) cases," Sime said. "This year, year-to-date, 64 percent are Chapter 7 cases, and 36 percent are Chapter 13. That's a slight shift toward Chapter 13s. Last year, it was 76 percent to 24 percent. The last time we saw this kind of breakdown was 2001, when the percentages were 65 to 35."

While there is a new law and the total filing numbers are down, Sime said that doesn't mean that bankruptcy protections have gone kaput.

"Because of the change in the law, . . . people may not be aware that bankruptcy relief is still available. It is," Sime said.

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