Bankruptcy
Bankruptcies break record with no signs of slowing
by
Kent Hoover
February 21, 2003
A record 1.58 million bankruptcy cases were filed in the United States in 2002,
up 5.7 percent from a year earlier, according to the Administrative
Office of the U.S. Courts.
There are no signs the bankruptcy boom will slow down any time soon. "With historically
high levels of consumer debt and many public companies in financial distress, we
expect 2003 to continue this pace," says
Samuel Gerdano, executive director of the American Bankruptcy Institute.
Howard Dvorkin, president of the nonprofit Consolidated Credit Counseling Services,
agrees that too much household debt "could lead to increased delinquencies and bankruptcies"
this year. "Many Americans are living on the financial edge," he says. "Then something
happens - divorce, accident, job loss - and the trouble starts."
Personal bankruptcies accounted for an overwhelming majority of the filings. The
number
of business bankruptcies fell by 1,559 cases last year to 38,540.
Financial industry lobbyists have been thwarted in their attempts to win legislation
that would force more consumers to pay back more of their debts through Chapter
13 repayment plans instead of wiping debts clean through Chapter 7 filings.
Congress was on the verge of passing a bankruptcy reform bill last year, but it
died when anti-abortion
Republicans objected to a provision that would prevent
protesters who block abortion clinics from using bankruptcy to avoid paying court judgments
or fines.
House Judiciary Committee Chairman Jim Sensenbrenner, R-Wis., plans to reintroduce
the bill this year without the abortion clinic provision, but Democratic senators
likely will insist on adding it.
Chapter 7 filings were up 5.2 percent in 2002 to 1.1 million, while Chapter 13 filings
increased 7.2 percent to 455,877. The Judicial Conference,
which represents federal judges, has asked Congress to create 36 bankruptcy judgeships in 22 judicial districts
to handle bankruptcy filings. Despite a 59 percent increase in bankruptcy caseloads,
no new bankruptcy judges have been added since 1992.
From the February 21, 2003 print edition Capitol Hill.
