Bankruptcy in Utah leads the nation
Legislation enacted by Congress in April 2005 will create the
biggest changes in Federal bankruptcy law in decades. The
Bankruptcy Abuse Prevention and Consumer Protection Act of 2005
will eliminate the opportunity for most Americans with debt
problems to file for bankruptcy under the rather forgiving
Chapter 7 of the bankruptcy code. Instead, most filers will have
to use Chapter 13 of the code, which allows the court to
establish a five year repayment plan for a portion of the debt.
Proponents of the plan, which included the major credit card
companies, blamed the recent increases in bankruptcy filings on
irresponsible shoppers, drug users, and gamblers, and not
ordinary citizens who have simply hit a streak of bad luck or
personal misfortune. Is this really the case? Are most
bankruptcy filers just wild, drug-using irresponsible people?
There is certainly some evidence to the contrary, and nothing
suggests otherwise like the fact that the highest bankruptcy
rate, on a per capita basis, is in Utah? Most would assume that
the highest rates of bankruptcy would be in states that have
more than their fair share of vices - California, New York, or
even Nevada. Shouldn't the state with a town nicknamed "Sin
City" suggest irresponsible activity and bankruptcy? But no, the
Bankruptcy Capital of America is none other than Utah.
On the surface, this statistic just doesn't seem to make sense.
Anyone who knows anything about Utah associates it with the hard
working, industrious and responsible Mormons, who regularly
contribute ten percent of their incomes to their church. How did
Utah find itself to be the pinnacle of personal financial
disaster?
Utah does have a few attributes that make it unique as a state.
Alone, none of these things would raise an eyebrow, but added
together, they form a recipe for disaster:
Utah has the highest birthrate in the United States. Seventy
percent of those who live in Utah are members of the Church of
Jesus Christ of Latter-Day Saints, otherwise known as the
Mormons. Members of the church are encouraged to have large
families, and they do so. The costs associated with having a
large family - food, housing, utilities, clothing and more, are
higher than they are for an average sized family.
Utah tends to have fewer families with two wager earners than
most states. Because families in Utah are larger than elsewhere,
there tend to be more families with stay-at-home moms. With only
one wage earner, and larger families, the per capita income is
smaller in Utah.
Wages paid to workers in Utah are lower than the national
average. Many high tech companies have established facilities in
Utah during the last decade, but many of these high tech jobs
are actually just telephone customer service positions that pay
as little as $8 per hour. It is difficult to raise a family on
such a wage, and nearly impossible to raise a large family that
way.
Members of the LDS Church are encouraged to tithe ten percent of
their income to the Church. Many do so, leaving them with a
smaller percentage of their income to use for living expenses.
The ratio of housing costs to wages are higher than in other
states, making housing comparatively more expensive. As a whole,
this combination of large families, lower wages, single earners,
and church donations have created an economic environment that
makes it difficult for many Utahns to meet all of their
financial obligations. This flies in the face of arguments put
forth during recent legislative sessions that suggest that
bankruptcy is strictly the product of irresponsibility. For many
hard working families in Utah, the new federal legislation will
make a difficult situation even more so.
Copyright 2004 1Debtfreedom.com.com