Bankruptcies up in North Dakota

BISMARCK (AP) — Credit card debt and the sudden impact of job loss or illness are among the reasons for an increase in Chapter 7 consumer bankruptcy filings in North Dakota, attorney say. They also say the numbers may reflect a return to levels before a 2005 change in the bankruptcy laws.

Nationally, consumer bankruptcy filings were up nearly 33 percent last year, to 1,064,927 from 801,840 in 2007, according to data collected by the National Bankruptcy Research Center and published by the American Bankruptcy Institute, an Alexandria-based research group.

In North Dakota, consumer bankruptcy filings increased 17 percent — to 1,188 — from 2007 to 2008. Some other states reported increases of up to 70 percent.

The change from 2006 to 2007 was even more dramatic in North Dakota: a 63 percent change to 1,018 from 619.

Bismarck attorney Jim Coles said most problems stem from too much credit card debt and, often, medical expenses.

“I don’t see a lot of people that have just lived a life they can’t afford,” Coles said. “A lot of them are related to loss of employment or illness or injury.”

Some say the increase may be partly due to a change in the bankruptcy laws.

The 2005 change required an income test to measure repayment ability and made personal bankruptcy filing more difficult. People with incomes above their state’s median income who can pay at least $6,000 over five years are forced into Chapter 13 bankruptcy, in which a debt repayment plan is ordered.

More than 3,000 North Dakotans filed for Chapter 7 before the change took effect late that year. In 2006, the number dropped into the 600s.

Now, the numbers may be heading back to levels seen before the bankruptcy laws changed, Bismarck family law attorney Edwin W.F. Dyer III says.

“It’s kind of like draining a reservoir and waiting for it to fill back up,” he said.

“I think, primarily, people have had their financial situation dating back to before the current financial crisis,” Dyer said. “But their decision to file bankruptcy may be determined by what’s happened recently.”

Dyer said his office has been taking more questions about bankruptcy filings in the past few months.

“It’s hard to say anything about trends, because everybody’s situation is different,” he said. “But I see many of the same factors at work. Overall, the number of cases being filed and the calls that I get from people wanting to file bankruptcy has been steadily increasing in the last few months.”

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