U.S. Courts report personal bankruptcy filings rise, business filings

St. Louis Daily Record & St. Louis Countian, Feb 27, 2004 by Emily Umbright

With the arrival of 2003's total bankruptcy tallies, the Administrative Office of the U.S. Courts has good news and bad news to report.

The bad news is bankruptcies flooded the nation's courts at a 5.2 percent increase for the calendar year ending Dec. 31. But like the law of gravity, what goes up must come down, and the calendar year's total did not break the historic highs reported from the Judiciary's fiscal year that ended Sept. 30.

According to the AOUSC, 1,661,996 bankruptcies passed through the courts during FY2003, but by the time the country switched calendars in January, the judiciary reported only 1,577,651 filings. This data clash, paired with the calendar year's 5.2 percent increase, creates a murky bath for interpretation, however, and the difference should not be attributed to 2002's leftovers, Dana McWay, U.S. Bankruptcy Court clerk for the Eastern District of Missouri, warned.

I think it would be hard to make any prediction or statement about it because it's not exactly apples and oranges, but it's not the same type of apple, she explained. You are talking about bankruptcy statistics, and you are talking 12 months, it's just a different 12- month window.

I think one of the consistent things is that overwhelmingly the percentage of non-business filings, the consumer filings, are up, she added. The largest majority of what are filed the consumer, personal bankruptcies.

Statistics from the AOUSC depicted personal bankruptcies shooting up 5.6 percent, while business bankruptcies actually plummeted 9.1 percent.

Statewide, Missouri fared as expected with a combined 20.6 percent increase of 37,830 total bankruptcies, up from 34,291 in the calendar year of 2002.

Consumers filed 37,452 bankruptcies in 2003, making up the bulk of Missouri's bankruptcy occurrences. Divorce, unexpected medical bills or job loss often led to bankruptcy in households with little or no savings, experts say, just as often as poor spending habits.

Last October, McWay estimated that filings within the Eastern District of Missouri would escalate beyond the 20,000 mark. Finalized data shows that eastern Missouri's score of 20,217 bankruptcies alone came close to the 8th Circuit's second highest filing state, Minnesota, which had 20,987 instances of bankruptcy. Missouri ranked number one.

The usual suspects - Texas, Florida and Georgia - topped the list of frequent filers, but bankruptcies were also on the rise in Michigan and Ohio, where bankruptcy filings occurred 62,754 and 89,771 times, respectively.

Legislation that would add 36 new judgeship positions is currently making its way through both the House and the Senate but has not, as of yet, made it past debates.

It's really a strain on the system without new judges, McWay said. This legislation has been introduced; I just don't know what will become of it. It's hard to predict what Congress will do.

In the past 10 years, judicial caseload increased 90.8 percent, with 5,124 filings per judgeship occurring during the 2003 calendar year.

To cope with the bankruptcy boom, bankruptcy courts nationwide enlisted the aid of technology, which helped courts stay afloat despite the flood of filings.

That has made a difference for us, McWay said. Electronic case filing has been one of the reasons why we have been able to handle the increase in filing and still be current on work.

Aside from the proposed judicial seats, Congress for years has been looking to take a bite into the burst of filings through separate bills targeting consumers.

While supporters say the most recent bill would prevent spenders from accumulating massive debt, opponents argue it supports big business while not supporting consumers hard-hit by the current economic conditions.

But what has most opponents in the Senate in a bind is a provision that they claim enables court fee exemptions to abortion activists filing for bankruptcy. Supporters contend the bill targets corporate criminals and parents avoiding child support payments. Tied to the bill is an amendment that was initially intended to renew bankruptcy protection laws for farmers.

While these bills simmer on the congressional stove, bankruptcy filings continue to pass through the courts.

We're right on target with where we were last year, McWay said about the statistics from first month of 2004. Assuming that everything stays as it did last year, we'll definitely hit the 20,000 mark.

But one month is hard to predict this.