Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, July 17, 1993 TAG: 9307170059
SECTION: BUSINESS PAGE: A8 EDITION: METRO
SOURCE: Knight-Ridder/Tribune
DATELINE: LENGTH: Medium
While the number of personal and corporate bankruptcies has nearly tripled since 1984, the growth slowed to just 3 percent in 1992 - and filings are down so far this year from the same period a year ago.
Last year, 971,517 individuals and companies sought refuge in U.S. Bankruptcy Court from their creditors, according to the Administrative Office of the U.S. Courts.
Consumers made more than 90 percent of the filings. Almost 1 percent of American households filed for bankruptcy last year. They came from the full social and economic spectrum: accountants and machinists, high income and low, college graduates and dropouts, all overwhelmed by easy credit.
"We're seeing a leveling off and a decline in the total number of bankruptcy filings," said Sam Gerdano, the American Bankruptcy Institute's executive director.
Most Americans are doing a better job this year of keeping current on their debts, which suggests the national trend to fewer bankruptcies will continue.
Lower interest rates and the modest economic improvements of the past year have helped people get a better handle on their obligations, said economist Robert G. Dederick of Northern Trust Co. in Chicago.
Consumer debt exploded in the 1980s as Americans followed the lead of the federal government in a borrow-and-spend spree. People were so willing to pack their wallets with high-interest plastic that credit-card debt soared 300 percent in the decade. Thus, for every dollar charged in 1980, there were four dollars owed a decade later.
Overall consumer debt did not grow as fast - Americans owed $2.28 in 1990 for every dollar they'd owed a decade earlier.
But even maxing out their credit cards, borrowing all the equity in their homes and gladly promising to pay tomorrow for a hamburger today, Americans were pikers compared to Uncle Sam.
For every dollar the government borrowed through bonds and Treasury notes in 1980, it owed about $4.80 as of March 31.
Unlike Uncle Sam, who can print money and tax people to pay its bills, millions of Americans found that when their jobs disappeared or their debts got too high, they had made more promises than they could keep. Many of these people benefited from a 1978 overhaul of the bankruptcy laws, which made it easier to shed unwanted debts by going to bankruptcy court.
by CNB