Tennessee continues to have the highest personal bankruptcy rate in the nation and experts are predicting even more filings next year because of the slowing economy.
According to a report released last week by the Federal Deposit Insurance Corp., the rate of personal bankruptcy filings in Tennessee during the first quarter of 2008 was more than double the national average.
Neighboring Georgia and Alabama ranked second and third, respectively.
Economists say they don’t see much improvement.
“Tennessee tied for dead last in per capita income growth last year, and we expect we won’t see much improvement in the economy until we’re into 2009,” said Matt Murray, associate director of the Center for Business and Economic Research at the University of Tennessee. “With the rise in gas and food costs, a lot more people are going to have trouble making ends meet, and I suspect we’ll see even more bankruptcy filings.”
Nationwide, the American Bankruptcy Institute reports that filings have grown in each of the nine quarters since Congress restricted who could file for bankruptcy in 2005.
With household debt rising, ABI President Samuel Gerdano predicts total bankruptcy filings in the United States will “surge past 1 million cases by year end.”
The National Bankruptcy Research Center estimates that one of every 56 households will file for bankruptcy relief this year in Tennessee.
Those who do file are more likely to repay at least a portion of their debts in bankruptcy court, according to court figures.
In fiscal 2007, Tennessee led all states in the amount of debts recovered by trustees in Chapter 13 reorganization cases. Tennesseans operating under Chapter 13 protection from creditors paid $541.5 million, or nearly 10 percent of the total payments nationwide.
Georgia ranked third among the states by repaying $412.6 million last year through Chapter 13 payments.
Even much larger states, such as California, recovered less than half as much as Tennessee did last year, according to bankruptcy court figures.
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