Bankruptcy in Kansas reaching new highs
Following a national trend, more Kansans filed for bankruptcy in April than in any other month in state history.
Last year, bankruptcy filings in the state and across the nation were up dramatically from the previous year, and 1997 is shaping up to be another record year.
“This is kind of a tidal wave coast to coast,” said Sam Gerdano, executive director of the American Bankruptcy Institute based in Alexandria, Va., a nonprofit research and education group.
By far, credit card debt is the biggest culprit. In many cases, it is the exclusive debt in the filings, said Michael Morris, a Wichita attorney who handles bankruptcy cases for the firm of Klenda Mitchell Austerman & Zuercher.
“I don’t see any end in sight,” Morris said. “I’ve seen cases with $100,000 in credit-card debt on 10 cards or more.”
In April, 1,306 Kansans filed for bankruptcy, up almost 24 percent from the 1,056 bankruptcies filed in April 1996, according to figures from the U.S. Bankruptcy Court for the District of Kansas. Bankruptcies in the state rose from 9,153 in 1995 to 11,316 in 1996 — the third consecutive year of increases.
A strong economy, driven by consumer spending, has lifted consumers’ confidence levels, spurring them to spend more. The problem is, many are doing more than their share, adding to their household debt at levels higher than their income gains.
“That’s no problem as long as something bad doesn’t happen, and if it does, they don’t have the cushion to sustain themselves through a job loss or a downsizing,” Gerdano said.
Nationwide, 95 percent of the bankruptcies were filed by individuals; businesses 5 percent, Gerdano said.
Not surprisingly, credit-card companies, banks and retailers issuing cards are reporting higher levels of bad debt.
Alarmed, they are pushing Congress to tighten the exemptions on property that debtors are allowed to keep in bankruptcy cases, asking for uniform exemptions across the country. Bankruptcy, they say, is too easy a way out.
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