Utah bankruptcy filings up 6% since last year

It's becoming almost routine.

Every month, every quarter, every year — bankruptcy filings in Utah keep soaring.

The first six months of 2003 were no different, with 11,345 filings flooding the U.S. Bankruptcy Court for the District of Utah.

That's a 6 percent increase compared with filings through June a year ago. It's a 20 percent run-up over filings in the first six months of 2001. And a 55 percent jump over 2000.

Experts nearly all offer the same opinions about why bankruptcies are climbing: job losses, divorce, catastrophic medical costs, high consumer debt and unsustainable mortgage debts. Any one of those factors, or often a combination, can quickly sink a household.

Jordan Goodman, a former Wall Street correspondent for Money Magazine and author of "Everyone's Money Book," points to a recent poll revealing 41 percent of Americans plan to increase their debt loads over the next six months.

"It's at the highest level ever," said Goodman from his New York office.

Overall consumer credit rose more than $7.3 billion in May over the previous month, a 5 percent increase, as consumers took on more debt in auto loans and credit cards, according to the Federal Reserve. Total revolving debt, or credit-card debt, amounted to $725 billion in May, up more than $3.1 billion over April.

Low mortgage interest rates are drawing more people to take on more debt, Goodman said. That has Goodman concerned as many strip away the equity from their homes.

"Every time rates fall they take more cash out of their house by refinancing and often pay off their credit-card debt," he said. "Except now their credit cards are free and available to use again."

Research by Utah State University backs up Goodman's assessment.

"Despite record-breaking homeownership rates and housing price escalation, total home equity has actually declined due to aggressive marketing of home equity credit and the rising proportion of first time homebuyers," said a November 2002 USU report titled "A Profile of Consumer Bankruptcy Petitioners."

In Utah, Goodman said the state's technology bust may be one contributing factor to rising insolvencies.

"My sense is technology created a lot of high living, people had stock options and then the bubble burst. At least that was what was happening in Silicon Valley."