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Bankruptcy

Rising Numbers of Single Women Face Bankruptcy

Joan Fleischer Tamen
Business Writer
SUNDAY JUNE 16, 2002

Another woman is called to take a seat at the table in Room 411-otherwise known as bankruptcy court - in the federal courthouse in downtown Fort Lauderdale.

It's mostly lone women who are sitting in the back or waiting outside for their turn to appear before bankruptcy trustee Sonya Salkin. In staccato succession, Salkin asks a series of questions: "Have you ever filed for bankruptcy before?" "Have you listed everyone you owe money to?" "Have you accurately listed your income and expenses?" Sometimes, there's a more poignant question like: "Where did all the money go?"

The process usually ends in less than a minute, and another bankruptcy is added to the pile in South Florida, where personal bankruptcies are up 15 percent this year.

A growing number are single women and single mothers, mirroring the national trend of women as the fastest-growing segment of the population in bankruptcy.

Heading up households with less income and employed in less secure jobs, women have been badly battered in this recession. Female-headed households had a median income of $28,116 in 2000, according to U.S. census data. That compares with a median income of $59,346 for married couple households and $42,129 for male-headed households.

Women with children are especially economically vulnerable, Cecere said. "You really don't see it happening until it's too late," said Angela, 34, a schoolteacher and mother of two who asked not to be identified. In the two years since her divorce, she amassed credit card debt of $21,000, using plastic to pay for rent, groceries and child care.

Credit cards "helped hold it together," she said. "But then I couldn't keep up the minimums or see how I was going to get out. This was a last resort."

Who's to blame

The credit card industry points to over borrowing and personal irresponsibility by debtors as the culprits behind the rise in personal bankruptcies, up 19 percent in 2001 to 1.45 million Americans going bust.

With consumer debt at a record $1.5 trillion, the banking and credit card industries want to make it harder for individuals to dodge their debt.

"Bankruptcy used to be the worst thing that could happen to you. Now that stigma has all but disappeared," said Howard Dvorkin, president and founder of Sunrise-based Consolidated Credit Counseling Services Inc.

Industry lobbyists have drafted changes to federal bankruptcy law, now under review in both House and Senate committees. These provisions would make it much harder for bankruptcy filers to get Chapter 7 status, which wipes out most debts, and force them to file under Chapter 13, which imposes a long-term repayment requirement and is far more favorable to creditors. Some see those measures as harsh and misplaced. "The credit card industry needs to look in the mirror," said Chris Olsen, a Fort Lauderdale bankruptcy attorney.

"One of the biggest reasons I see for bankruptcy is that most of my clients are extended credit beyond their means. If somebody is making $40,000 a year, they shouldn't get $50,000 in credit," Olsen said.

"The companies push their cards on everyone. I've had clients come in with a credit card they got in the mail while we're filing their bankruptcy."

Dvorkin says both sides may be right. His nonprofit company aims to strike a balance between creditors and debtor. He gets companies to waive or drastically lower the interest rate on outstanding debt while he gets the client to adhere to a strict debt management plan.

"Bankruptcy is not an end-all. You fall into the same problems if you don't learn how to budget and how to handle credit," said Dvorkin. As past president of the Association of Independent Consumer Credit Counseling Agencies, a trade association for the credit industry, Dvorkin was instrumental in adding a requirement for credit counseling for all bankruptcy filers as part of the proposed changes.