Northern Nevada bankruptcy filings up by 1 percent in year

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."