U.S. bankruptcies dip for first time since 2000

Bankruptcy filings nationwide from July 1, 2003, through June 30, 2004,experienced their first annual decline since 2000, according to the American Bankruptcy Institute. The 1,635,725 cases were a 0.9 percent drop from the 1,650,279 cases of the previous 12 months, the report said. The downward trend is noteworthy after total bankruptcy filings rose each year since 2000.

Business filings dropped 3.9 percent from 37,182 for the 12-month period ending June 30, to 35,739, according to the ABI report.

“It’s hard to say exactly what’s driving that number either way,” said Edward Janger, resident scholar at the ABI and professor of law at Brooklyn Law School. Driving numbers up are factors related to growth in sub-prime lending, a decrease in savings rates, changes in how people use credit cards and a more efficient bankruptcy court system processing caseloads, he added.

Factors related to declining numbers could be low interest rates where refinancing options have kept people from declaring bankruptcy, Janger said. Overall, a comprehensive assessment is difficult, he added. “There are so many yins and yangs here.”

Missouri’s Western District

Throughout Missouri’s Western District, which comprises the metropolitan areas of Kansas City, Jefferson City, Joplin, Springfield and St. Joseph, bankruptcies are down 53 cases from Jan. 1 through Aug. 31 with a total of 12,020, said John Cisternino, chief deputy bankruptcy clerk in Kansas City for the Western District Court.

For the same period last year, bankruptcy case totals were at 12,073, Cisternino said.

But in Springfield’s division, the numbers are still persistently inching higher.

“We’re still up another 2 percent in Springfield for January through August compared to where we were last year at this time,” said U.S. Bankruptcy Judge Arthur Federman, who oversees the Springfield docket for the Western District’s Southern Division.

“We had a total of 2,279 cases filed as of Aug. 31 in that division,” Federman said.

Case totals for the Springfield division for the same period last year came in at 43 cases less and were 2,236, Cisternino said.

Private citizens are shouldering the overwhelming bulk of the bankruptcy load throughout Missouri’s Western District. “Over the years we typically run about 96 percent consumer versus about 4 percent business. This is district-wide,” Cisternino said.

Reasons behind bankruptcy

Four principal reasons appear to lay behind the decision most people cite when choosing bankruptcy to clear away their debt, according to Federman. Lack of having adequate health insurance, divorce costs and settlements, prolonged unemployment and spending beyond one’s means – often by running up credit card totals – are the most frequent precipitators.

“It’s just a fact of life. People spend based on the assumption that things aren’t going to change. Then when one spouse gets laid off or gets sick and can’t work, or they have an unexpected health care bill or so something else, they’re just not equipped to deal with it,” Federman said.