Record number of bankruptcies reported in 2003 in Minnesota

ST. PAUL (AP) -- There was a record number of bankruptcies in Minnesota in 2003 as debtors struggled with a stagnant job market and mountains of consumer debt.

Last year, 20,885 bankruptcies were filed in Minnesota, a 7.6 percent increase from the year before, according to recent data from the U.S. Bankruptcy Court's Minnesota District.

Nationally, bankruptcy filings increased 5.5 percent to 1.62 million, which also appears to be a record, according to Lundquist Consulting, a California firm that tracks insolvencies.

While a fraction of those bankruptcies were from businesses, consumers accounted for the bulk of them.

The increased financial woes are rooted partly in growing consumer debt, say bankruptcy lawyers and mortgage counselors.

Household debt service burdens, while down from late-2001 peaks, are still near 20-year highs, according to the Federal Reserve.

Meanwhile, the American Bankers Association reports that credit card delinquencies hit a record high during 2003's third quarter

The shaky job market just makes matters worse, undercutting sources of income needed to make debt payments.

"It really is the economy," said Robert Everhart, a Twin Cities bankruptcy attorney. "I've seen a lot of long-term unemployment or underemployment."

Layoffs remained high last year in Minnesota. Initial unemployment claims in 2003 rose 2 percent over 2002, according to the Minnesota Department of Employment and Economic Development.

Meanwhile, the number of people who exhausted their unemployment benefits before finding a new job also remained high. Unemployment exhaustions totaled 68,030 in 2003, down less than 1 percent from 2002, state data shows.