Bankruptcy filings in Utah were up 25 percent in 2007 from the previous year.

The U.S. Bankruptcy Court in Utah reported 6,284 bankruptcy filings in 2007, up from 5,031 in 2006. Even so, the increase was lower than the national average. And thanks to a change in bankruptcy law, Utah's filings are lower than in previous years.

The largest increases during 2007 were in filings of Chapter 7 and Chapter 13 bankruptcies, which can be filed by individuals.

"We're having more Chapter 13s (than) Chapter 7s," Utah bankruptcy court clerk David Sime said Friday.

Chapter 11 bankruptcies, which are usually business reorganizations, only increased by two new filings in 2007. And Chapter 12, filed by family farmers, did not increase.

Chapter 13 bankruptcy is filed by individuals or couples who want to ward off creditors by repaying them over a five-year plan without losing assets such as their homes.

Chapter 7 bankruptcies are filed by individuals or couples and some businesses and result in the sale of all assets. Proceeds from the sale go to creditors.

Some financial experts predict bankruptcies in Utah will continue to increase through 2008, based on increases in other parts of the United States.

"Even with our very strong economy and low unemployment rate, our research shows there are about a third of people living paycheck to paycheck," said Deborah Bayle, president and chief executive officer of the United Way of Salt Lake, which authored a report in 2006 on the state's bankruptcy problem.

High debt, low savings and an emergency such as a divorce or job loss can lead to bankruptcy, Bayle said.

In fall of 2005, when bankruptcy law changed, Utah led the nation with the highest number of bankruptcies per capita.

"Prior to the change in the law, we were always right at the top, either No. 1, 2 or 3," Bayle said.

Before the law change, people could file for a new Chapter 7 bankruptcy just six years after a previous Chapter 7 bankruptcy. Now, the law requires a wait of eight years. Before the law change, many people repaid creditors under Chapter 13 reorganization in three years. Now, that repayment usually occurs in five years.

The result of the law change is that more people are opting to file Chapter 13 bankruptcies in Utah. Chapter 13 bankruptcies were 43 percent of the total cases filed in 2007, up from 38 percent in 2006, according to the court.

"I'm filing many many more Chapter 13s than I ever did before, and less Chapter 7s," said Jody Howe, a Utah bankruptcy attorney who represents individuals and couples.

The U.S. Bankruptcy Court has not released any national data for 2007, but findings by the American Bankruptcy Institute of Alexandria, Va., show Utah's 25 percent increase in filings is modest compared to the national average increase of 40 percent.

The institute released data Jan. 3 stating that the 40 percent increase was in "consumer bankruptcy," which is the filing of Chapters 7 and 13 by individuals or couples.

The institute blames 2007's bankruptcies on an already heavy consumer debt load made worse by the home mortgage crisis.

---

E-mail: lhancock@desnews.com