Utah leads country in bankruptcy filings
By Rich Vosepka
Associated Press
Aug. 25, 2002
SALT LAKE CITY - Utah residents are more likely to file for bankruptcy than residents of any other state, according to a financial research organization.
During the year ending March 31, roughly one of every 35 Utah households filed for bankruptcy, according to the American Bankruptcy Institute, a Virginia-based research organization. That far outpaced the national average of one for every 69 households.
And the numbers aren't improving: July saw a record 1,915 filings, and 2002 is on pace to set a state record with more than 20,000 filings.
There's no simple explanation, financial experts say.
Some point to obvious factors: Utah's per-capita income ranks 45th in the nation. Its families, many of them part of the Mormon faith, are larger than those in other states. The job market is weak. The cost of living is relatively high.
The state is also the nation's youngest - the median age is 27.1, compared to 35.3 nationally - and its birth rate is the highest. That means fewer workers are supporting more people.
Experts say it may be that people in Utah are living closer to the financial edge, so they struggle when hard times or a crisis arrives.
"Most of the time, the problem arises not because of wild consumerism, but because something really bad happens," said Darren Bush, an economist and law professor at the University of Utah.
Attorney Kevin Whatcott agrees. He files as many as 300 bankruptcies each month at his Salt Lake City law firm. The people who come to see Whatcott usually have one of three stories: sickness, divorce or loss of a job.
"People are always living on the edge," Whatcott said. "As soon as there's one little hiccup, the interest starts building. In every single case, if people were paying cash rather than buying on credit, they'd probably be able to weather the storms."
Still another factor may contribute to Utah's spate of bankruptcies. The Church of Jesus Christ of Latter-day Saints, based in Utah, counts 70 percent of the state's residents as members, and observant followers donate 10 percent of their income to the church.
Utah may be hardest hit, but it is hardly alone. A record 1.5 million people filed for bankruptcy in the United States the past year. Filings for the second quarter of 2002 were a record: more than 400,000, the American Bankruptcy Institute said.
Bush noted that irresponsible spending and overreliance on credit cards contribute to financial distress.
"Utahns don't save, just like the rest of the nation doesn't save. The first line of defense is credit cards," Bush said.