April 18, 2002

Number of N.D. Bankruptcy Cases Rises 82 Percent During 90s

About 2,000 bankruptcy petitions were filed in North Dakota in 2000, 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 82 percent between 1990 and 2000. The steep rise in cases filed in North Dakota during the mid to later part of the 1990s is in stark contrast to the overall economic health of the state, according to Richard Rathge, director of the State Data Center.

According to the latest data available, taxable sales in North Dakota rose 53 percent since 1990 while per capita income increased 47 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 says. In the absence of statewide data, some conclusions can be drawn from national trends, which show that credit card spending has increased 177 percent between 1990 and 1999 reaching $1.3 trillion while credit card debt has risen 153 percent topping $614 billion. This is at a time when personal savings in the United States dropped from a positive $334 billion in 1990 to a negative $8.5 billion in 2000.

"This is a typical problem where our financial eyes are bigger than our pocketbooks," said Richard Rathge, Director of the State Data Center. "Credit cards are very easy to get and it is easy to lose sight of our spending. Unfortunately, service fees and interest rates for credit can be high, thus once someone falls behind in payments it is a downward cycle," said Rathge.

On average, bankruptcy cases in North Dakota rose 6.8 percent per year between 1990 and 2000. The nation as a whole averaged 6.5 percent per year during the same time. States in the Northeast showed the largest average annual increases in bankruptcy petitions filed between 1990 and 2000. Hawaii had the highest increase of 20.3 percent per year on average since 1990, followed by Delaware at 20.0 percent. Colorado showed the only decrease in the nation, declining 0.4 percent per year on average since 1990. Arizona, Minnesota, Alaska, and Alabama all had increases of less than 3 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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