
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SATURDAY, July 17, 1993                   TAG: 9307170064
SECTION: BUSINESS                    PAGE: A8   EDITION: METRO 
SOURCE: John Levin
DATELINE:                                 LENGTH: Short

IN ROANOKE, A WORD OF WARNING

Bankruptcy filings continued to decline in Western Virginia during the second quarter, but the report Friday came with the warning that an increase early next year seems inevitable.

Federal tax increases that will shrink take-home pay for many Americans combined with easy consumer credit are likely to mean more bankruptcies by early next year, said John W.K. Craig, clerk of the U.S. Bankruptcy Court for the Western District of Virginia in Roanoke.

"I'm not optimistic," he said. "I really hope I'm wrong, but I'm not optimistic."

Craig said the next wave of business and personal failures is likely to hit immediately after the year-end holidays.

The "bill-paying season is when a person decides there is no hope of getting out of debt; they have to get the monkey off their backs and file for bankruptcy," he said.

Tax increases may mean higher payroll withholding for many Americans. "When people see their take-home pay drop, even by a few dollars . . . we'll see an uptick in filings," he said.

Craig sees the recent decline in petitions as a breather from the steady increases of 1986 to 1991. Last year, the number of petitions fell 7 percent and he expects them to fall another 15 percent this year.

But the number of businesses seeking protection from creditors rose.

That follows a theory that business bankruptcies correlate "directly with new business starts and a growing economy," as operators of small and new companies take greater risks, Craig said.

"These figures show that even with rapidly declining personal filings, business filings continue to increase," he said.

by CNB