Bankruptcy filings in northern Nevada
have risen slightly in the last year based on
data through July of this year.
The U.S. Bankruptcy Court has seen
18,579 case filings in Nevada from August
2001 through July 2002. During the same
time a year earlier, there were 16,371 cases,
a 13 percent increase.
Bankruptcy courts in Nevada are broken
down into two divisions the North
Division in Reno and the South Division
in Las Vegas. In the North Division, there
was a 1 percent increase from 2001 to 2002
with 4,230 cases reported. In 2001 4,205
cases were recorded.
Of those case filings in 2002, 3,679
were Chapter 7 cases, 71 were Chapter 11,
and 462 were Chapter 13.
Last month, there were 437 bankruptcy
cases were filed. Of those, 399 were
Chapter 7 filings.
Events of Sept. 11, 2001, and the outbreak
of corporate scandals had little bearing
on jump in bankruptcy filings in
Nevada. Ron Cundick, assistant to the
U.S.Trustee said those events have little or
no effect on the rise in case filings.
"I don't think you can tie a chain to it,"
Cundick said.
Instead, he said for instance, Chapter
11 filings, which usually involve corporations
or partnerships, often result from
poor real estate transactions.
"Some real estate developers don't estimate
construction costs and end up not
paying the contractors," Cundick said.
One contributing factor to personal
bankruptcy filings, Cundick said, is how
banks and credit card companies mail
enormous numbers of credit applications
to potential customers. He said applying
for credit cards is tempting to people with
financial difficulties.
"People sometimes look at credit cards
as a way to get out of debt, but that is not
always necessarily the case," Cundick
said.
The U.S. Senate is studying legislation
to decrease the number of personal bankruptcy
filings under Chapter 7 and
instead encourage them to file under
Chapter 13.
Under Chapter 7, debtors liquidate all
assets, pay what they can to their creditors
and are absolved of the requirement for
full repayments.
With new legislation, if debtors with
more disposable income would file under
Chapter 13. This would require debtors
to pay at least a percentage of what they
own to creditors over a period of time,
usually somewhere within three to five
years.
"It won't eliminate Chapter 7,"
Cundick said. "It will be beneficial to the
unsecured creditors."
