NorthwestJanuary 4, 2004

Chuck Oxley

BOISE -- Personal and farm bankruptcies shot up in 2003 while the number of business filings actually dropped, according to statistics provided by Idaho's U.S. Bankruptcy Court.

The 9,400 bankruptcies filed in Idaho last year set a new record, maintaining the trend of the past three years. It was a 7.3 percent increase over 2002.

But there was a tiny hint in the numbers for the final two months of the year that Idaho residents' financial picture may be brightening.

The 2003 figures appear to follow the general direction of the economy, which has suffered for the past three years but has shown recent signs of recovery, state economist Derek Santos said Friday.

"We are forecasting the economy is rebounding and, hopefully, the bankruptcy numbers will improve also," he said.

Santos pointed to data from November and December of 2003 as potential signs of that recovery. In November, the 595 bankruptcy filings represented a 1.5 percent decrease from November 2002. In December, the 433 filings were 17.7 percent below December 2002.

"It's interesting that there might be some important changes going on already," he said.

Economist John Church of Boise said the nation's health care crisis also seems to be driving the number of personal bankruptcies.

"I've seen studies that show the share of people without medical insurance can account for as much as 25 percent of bankruptcies" when they find themselves hit with a medical catastrophe, he said.

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Church said the fact that there were fewer corporate bankruptcies also points to the notion that the drop in business has at least bottomed out.

As of Dec. 31, 2003, the U.S. bankruptcy court in Idaho received filings for:

8,125 Chapter 7 liquidation bankruptcies, up 7.8 percent from the previous year's 7,478. A Chapter 7 filing allows a person to obtain a fresh start, free from creditors and the pressure of overwhelming debt. Under this chapter, a trustee takes possession of nonexempt property and assets, converts them to cash and distributes the funds to creditors. Among exemptions is a homestead worth up to $50,000.

43 Chapter 11 bankruptcies, down 17 percent from 52 in 2002. A chapter 11 bankruptcy gives businesses time to restructure their finances so they can continue to operate under a court-approved recovery plan.

22 Chapter 12 bankruptcies, up 7 from the previous year's 15 filings. Chapter 12 bankruptcy law was created to help family farmers who need to reorganize their debts while keeping their land.

1,210 Chapter 13 bankruptcies, nearly unchanged from last year's 1,214. A chapter 13 bankruptcy allows an individual debtor with a regular income pay back debts and keep assets. A person who operates a small business as a sole proprietor may file under this chapter.

National bankruptcy figures for 2003 were still unavailable on Friday. In 2002, Idaho ranked eighth highest among the 50 states, with a bankruptcy filing for each 62.6 households.

Typically, the number of monthly bankruptcy filings spike in March and April and then tail off the next 10 months.

Sue Beitia, chief deputy of the federal bankruptcy court in Boise, acknowledged the year-to-year trend but said she did not know what drives the phenomenon.

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