Bankruptcy filings rose 56% last year in Utah

The number of individuals and businesses filing for bankruptcy in Utah jumped 56 percent in 2009 — the fifth-biggest rise among states.

Figures released Wednesday by the U.S. Bankruptcy Court show 14,481 filings for 2009, compared with 9,256 in 2008.

Statistics indicate 9,283 Chapter 7 filings, in which assets are liquidated to pay debts. That is up from 5,413 filings in 2008. Meanwhile, Chapter 13 filings, resulting in debt adjustment, totaled 5,103, compared with 3,766 filings the year before.

While the yearly bankruptcy figures are up significantly, some monthly numbers from last year were especially striking, according to court clerk David Sime.

"There were a few months this (past) summer where the year-over-year monthly comparison was up 75 percent," he told the Deseret News.

Nationally, an Associated Press report Monday said that U.S. consumers and businesses are filing for bankruptcy at a pace that made 2009 the seventh-worst year on record, with more than 1.4 million petitions submitted.

The AP gathered data from the nation's 90 bankruptcy districts and found 1.43 million filings, an increase of 32 percent from 2008. There were 116,000 recorded bankruptcies in December, up 22 percent from the same month a year before.

For three years, filings have been steadily rising back toward levels reached early in the decade before Congress overhauled the nation's bankruptcy laws. The 2005 alterations made bankruptcy filings more cumbersome, a move that followed fears from lenders that some consumers were abusing the system to wipe away debts.

Bankruptcies surged to slightly more than 2 million in 2005 as consumers rushed to file before the new law took effect but then plummeted to 600,000 in 2006. They've been climbing ever since and in 2009 became the seventh-highest year on record, behind only the years 1998 and 2001-2005.

The 2005 spike had been preceded by a steady climb from 1.5 million in 2001 to 1.6 million in 2005.

Sime said Utah saw similar declines following the legal changes, with more than 20,000 filings annually from 2003 to 2005. However, the number of filings plunged to just over 5,000 in 2006 and have increased yearly since then.

Though the number seeking bankruptcy protection has steadily risen over the past three years, they are still well below their peak.

"Although we're up 56 percent, (the number of filings) still haven't rebounded to (pre-2006) levels," he said.

e-mail: jlee@desnews.com