Someone asks about Utah Bankruptcy Law

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Q. What happened to, "if you tithe, you will be blessed"? Does tithing contribute to Utah's bankrupt problems.?

A. After reaching 19,342 bankruptcy filings in 2001 — a 28 percent increase over 2000 and the highest number since the U.S. Bankruptcy Court for Utah began keeping records — Utah is poised to topple its new record, possibly surpassing 20,000 filings in 2002. Blame it on maxed-out credit cards, proposed bankruptcy reforms, medical costs or simply trying to maintain a certain lifestyle, but an increasing number of Utahns are turning to the courts to escape mounting debts. Bankruptcy filings in the state for the first six months of 2002 reached 10,714 cases (including estimated figures for June), 13 percent more than the first half of 2001 and 47 percent greater than the same period in 2000, according to statistics released by the court. "It would appear that unless the bottom falls out, we will have more filings than last year. It looks like we will probably go over 20,000 for the first time ever," said William Stillgebauer, Utah bankruptcy court clerk. And according to a separate national ranking for the 12 months ended March 31, Utah was first in the country in the rate of bankruptcy filings, at roughly one per 34.5 households. Tennessee, which in the past year had outpaced Utah filings, barely slipped to second place with one filing out of every 34.7 households, according to the American Bankruptcy Institute, a Virginia-based bankruptcy research organization. "Utah is historically among the highest filing rates on a household per filing basis. It's not a new phenomenon. It's been that way for several years," said Samuel Gerdano, executive director of the institute. On average, one of every 69 households nationwide files for bankruptcy, according to the institute. National bankruptcy statistics for the second quarter have not yet been released. The majority of filings in Utah fall under Chapter 7 of the bankruptcy code, which liquidates assets and allows debts to be forgiven. Under proposed bankruptcy legislation pushed by the financial services industry, debtors would have a tougher time being absolved of debt. For example, filers would be required to pay back higher amounts of unsecured debt. Debtors meeting the median income of their filing state would be required to repay at least 25 percent of their debt over five years rather than having the debt dissolved. "Filings are high and have been high upon news that bankruptcy reform is imminent. That's because the reforms of the bill would make bankruptcy much less attractive and much less debtor-friendly than current law," said Gerdano, who added he expected President Bush to sign a bankruptcy bill later this year. Once signed, the new law would take effect in six months. Nationally, nearly 1.5 million bankruptcy filings were processed by federal courts last year, an all-time record, Gerdano said. "It looks like 2002 will break that record."

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