Bankruptcy Filings Increase 30% In Idaho Easy Access To Credit Drives Many Cardholders In Over Heads

Bankruptcy courts in Idaho are seeing more people and businesses coming through their doors.

Filings increased by 30 percent in 1996 over the previous year.

And this year, the number is up another 30 percent, said Sue Beitia, chief deputy clerk with the U.S. Bankruptcy Court.

Idaho statistics reflect national figures, which show a 29-percent jump in bankruptcies over 1996.

Easy access to credit is one reason for the increase, said veteran bankruptcy attorney Bruce Bacon of Twin Falls.

“And once you have it, they keep increasing your credit limit and people are lost in the mire,” he said.

The majority of bankruptcy filings in Idaho are Chapter 7, or consumer bankruptcy.

Of the 5,432 bankruptcies filed in Idaho last year, 3,993 were Chapter 7.

“I think it’s a combination of a change in attitude about bankruptcies and the use of credit,” said Twin Falls attorney Jay Sudweeks, who has handled bankruptcy cases for 20 years. “A lot of people are filing simply because they are in hock far too deep with credit cards and they can’t do anything else.”

Others say an increasing number of credit cards is part of the problem.

“There has been quite a proliferation of credit cards available, not so much from local financial institutions, but larger chains,” said Kelly Matthews, First Security Bank’s economist in Salt Lake City.

Big banks charge higher rates and fees, taking into account expected bankruptcies.

Paying customers end up carrying non-paying ones, he said.

The people who get into trouble do not understand the consequence of debt, Matthews said.

“They literally borrow themselves to the point where they can’t carry it, and unfortunately bankruptcy becomes an alternative that is becoming used more and more.”

Bank-issued credit cards account for 7 percent of total consumer debt, the non-profit National Consumers League said.

Almost 97 percent of Americans pay credit card bills on time, but cards from department stores, gasoline stations and others can add up, the organization said.