Bankruptcy Cases Continue to Increase in North Dakota

In 2006, 2,471 bankruptcy cases were filed in North Dakota. The vast majority (97.3 percent) were personal rather than business. Bankruptcy cases in the state increased by 16 cases from 2005 and by 442 since 2000 for an average increase of 3.5 percent per year.

This month's "Economic Briefs," a monthly publication from the North Dakota State Data Center at North Dakota State University, focuses on the number of bankruptcy cases filed by state as reported by the Administrative Office of the U.S. Courts.

Forty states and the District of Columbia reported decreases in the number of bankruptcy cases filed between 2005 and 2006. Bankruptcy cases filed in the U.S. dropped 9.3 percent in the last year, but increased an average of 2.8 percent per year from 2000 through 2006.

In 1981, 600 bankruptcy cases were filed in North Dakota. The number of filings rose dramatically during the latter half of the 1990s, reaching a peak in 1999 at 2,200 cases. Bankruptcies then showed a modest decline, but increased to 2,471 by 2006. North Dakota's trend in bankruptcy filings has closely followed the national pattern of annual change. By comparing the rate of personal bankruptcy cases to total households, one can assess the proportion of bankruptcy cases relative to other states.

"This rather broad indicator suggests that less than 1 percent of households in North Dakota filed for bankruptcy in 2006," says Richard Rathge, State Data Center director "Only nine states and the District of Columbia had a lower percentage."

An important factor in bankruptcy cases is debt. According to data from the 2004 Survey of Consumer Finances, three out of four families in the U.S. have some form of debt. In 2004, mortgage debt in the U.S. totaled $10.5 trillion, up 54.2 percent from 2000. While credit card debt represents only 3 percent of all family debt nationwide, the median balance for cardholding families carrying a balance was $2,200 in 2004. One in four families with credit cards hardly ever pays off the balance.

"Those under age 35 are the most likely to carry a balance on their credit card, with 35 percent saying they hardly ever pay off the balance," Rathge says.

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