March 22, 2001

North Dakota Sees Steep Increase in Bankruptcies

In 1999, approximately 2,200 bankruptcy petitions were filed in North Dakota, according to a recent Economic Brief released from the North Dakota State Data Center at North Dakota State University.

The number of bankruptcy cases in North Dakota grew 83 percent between 1981 and 1990. Cases rose another 100 percent between 1990 and 1999. "The trend in bankruptcy cases in North Dakota is very troubling," said Richard Rathge, director of the center. "The steep rise in cases filed in our state during the mid to later part of the 1990s is in stark contrast to the overall economic health of the state.

According to the latest data available, taxable sales in North Dakota rose 49 percent since 1990 while per capita income increased 21 percent. These gains occurred at a time when interest rates remained low and inflation stayed at or below 3 percent. The contradiction between good economic times and soaring bankruptcy cases can be explained, in part, by the sharp rise in consumer debt, Rathge said.

"In the absence of statewide data, we can draw some conclusions from national trends which show that credit card spending has increased 148 percent between 1990 and 1998, reaching $1.2 trillion, while credit card debt has risen 132 percent, topping $564 billion," Rathge said. "This is at a time when personal savings in the U.S. dropped 53 percent from $334 billion in 1990 to $156 billion in 1999."

On average, bankruptcy cases in North Dakota rose 8.5 percent per year between 1990 and 1999. The nation as a whole averaged 8.2 percent per year during the same time. States in the Northeast showed the largest average annual increases in bankruptcy petitions filed between 1990 and 1999. Hawaii had the highest increase with 24.2 percent per year on average since 1990, followed by Delaware 19.4 percent. Colorado had the lowest increase of 0.63 percent per year on average between 1990 and 1999. In addition to Colorado; Alaska, Alabama, Minnesota, Tennessee and Arizona all had increases of less than 5 percent per year on average.

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Source: Richard Rathge, (701) 231-8621, richard_rathge@ndsu.nodak.edu
Editor: Tom Jirik, (701) 231-9629, tjirik@ndsuext.nodak.edu

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