More Utahns filed for bankruptcy in the third quarter of 2005 than during the same three-month period last year.
Filings spiked in September as people rushed to beat sweeping new bankruptcy reforms that go into effect Monday.
According to the U.S. Bankruptcy Court for the District of Utah, 5,410 filings were made in the three months ended Sept. 30, up from 5,340 filings in the same quarter in 2004.
However, filings from January through September decreased by 1 percent compared to the same nine-month period a year ago.
In September, Utah filings skyrocketed to 2,208, up 22 percent from 1,803 in the same month of 2004.
In the past few weeks, local bankruptcy attorneys have reported a jump in filings due to the pending reforms, which will make it harder to file.
Typically, a few dozen filings are made each day in bankruptcy court. But in the past few days, filings have topped more the 250 cases several times. On Tuesday alone, more than 275 Utahns filed for bankruptcy.
The new reforms will establish a means test for measuring a debtor's ability to repay. Those who earn more than their state's median income, and who can pay $100 a month over five years, will be forced into a Chapter 13 filing instead of a Chapter 7, which erases unsecured debt like credit card balances.
About 80 percent of the third quarter's bankruptcy filings in Utah were made under Chapter 7. Bankruptcy experts believe that only about 8 percent to 10 percent of those filing for a Chapter 7 under the new law will be bumped to a Chapter 13 filing, which reorganizes debts to be paid over a five-year period.
Groups like Consumers for Responsible Credit Solutions, a national consumer advocacy group focused on the banking and credit card industries, have said the new legislation rewards banking and lending institutions for practices that have contributed to the nation's high default rates, namely addiction to easy credit.
According to bankruptcy experts, nearly nine out of 10 families with children cite just three reasons for their bankruptcies: job loss, family breakup and medical problems.
According to Lundquist Consulting, a Burlingame, Calif., financial research firm that tallies weekly bankruptcy statistics, 102,863 bankruptcy filings were received in U.S. courts last week — more than 20,000 per day, on average. The number of filings has climbed 19.4 percent year-to-date to 1.47 million, compared to 1.23 million during the same period in 2004.
Contributing: The Associated Press
E-mail: danderton@desnews.com