Reasons for Bankruptcies in Utah

Why So Much Bankruptcy in Utah...?

Utah was feeling a little better at the end of 2001, when the State ranked 3rd in the U. S. in per capita personal bankruptcy filings. But by the end of 2002, Utahns filed 22,052 times, taking over the No. 1 spot. At the end of 2003, Utahns filed 21,917 times, 135 lower than the year before, but Utah retains the No. 1 ranking.

The national average of family bankruptcies is one in every 77 homes. In Utah's very simply, it's one in 37!

Just over two-thirds of them are filed as Chapter 7, which means Utahns want to be relieved of all unsecured debts.

Why do so many Utahns file? Dr. Jean Loun, a professor at Utah State University, has done more research on this topic than anyone else in the State. She has made some interesting observations. Dr. Loun has difficulty drawing clear conclusions because there are no laws in Utah that require the filer to reveal gender, age, formal education, annual salary, county of residence and other factors normally wanted for demographic classification of a group in our society.

She does make the following observations:

* The cost of living in Utah is very close to the national average (Most people think it costs less to live in Utah.)

* The average per capita income in the U. S. is $ 21,587. In Utah, the average is $18,185.

* The average hourly wage rate in Utah is 88 percent of the national average, so "we must do the same with less."

* In the U.S., women earn 75 percent of what the men earn. In Utah, the rate is 62 percent, the largest gender gap in the U. S.

* On the average, Utahns have one more vehicle per household.

* Over 25 percent of the homes in Utah have eight or more rooms, well ahead of the U. S. average.

* Because of a rapidly growing population, Utah has an average of a half a person more in each home than in the U. S.

* The average cost to raise a child from the year 2000 to 2018 is just over $230,000.

* In 1981, across the U. S., families owed an average of six weeks' worth of debt. In 1991, debt rose enough to require six months to pay it off.

* In the U. S., 80 percent of students graduate from high school. In Utah, the rate is nearly 88 percent.

* In the U. S., almost 25 percent of adults have a bachelor's degree. In Utah, the rate exceeds 25 percent. However, the higher the formal education level, the higher the propensity to spend and the higher debt level follows.

* The Salt Lake City area ranks first in the nation for charitable donations (to churches and other charities). That rate approaches 15 percent. In Utah County, the rate is 24 percent.

* States that do not have a requirement for a personal finance course in high school have higher bankruptcy rates.

* Greatest single factor seems to be uncontrolled spending with credit cards and incurring more debt than families can actually handle.

Conclusion: It costs about the same here, but we use less money per hour to do it, with larger homes and mortgages, another car, another child (every other address) while giving a lot of money away, while providing a comfortable living for ourselves and our children, often using credit cards with little regard to the ability to repay the loans.