This is an archived article that was published on in 2011, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

A growing number of the state's residents filed for bankruptcy during the first half of this year, countering a national trend.

David Sime, clerk of the U.S. Bankruptcy Court for Utah, said Monday the court received 9,927 bankruptcy petitions in the first six months of 2011, an 11 percent increase over the number filed in the same period a year ago.

"Our percentage increase was not as great as last year, but there is no indication that we're going to see any downturn in the near future," Sime said.

Bankruptcy filings in the state during the first half of 2010 were up 31 percent over the previous year as Utahns continued to struggle with financial problems in the wake of the Great Recession.

Utah's first-half increase in filings this year ran opposite of U.S. numbers. But the reasons why may surprise you.

The American Bankruptcy Institute, relying on data from the National Bankruptcy Research Center, reported that filings nationwide totaled 709,303, an 8 percent decrease from the first half of 2010.

"The drop in bankruptcies shows the continued efforts of consumers to reduce their household debt, and the overall pullback in consumer credit," Samuel Gerdano, the Institute's executive director, said in assessing the national picture.

Utah's rising bankruptcy numbers may be a sign that the state is a victim of its own economic success.

Relatively low unemployment here — 7.3 percent versus 9.2 percent nationally — may be providing more of the state's residents with the financial wherewithal to file for bankruptcy, compared with elsewhere.

Jean Lown, a professor at Utah State University who has done research into consumer bankruptcy trends, said some of her earlier research suggested many debtors must save up to pay their filing and attorney fees.

"They could not afford to file after losing a job. They had to wait until they got a new job to be able to afford to file," she said. "So as the economy improves, more debtors who have no hope of repaying all their unsecured debts will file once they get a new [usually lower-paid] job."

Another expert also has suggested that Utah's job picture may have contributed to the state's bankruptcy rate.

Earlier this year, University of Arizona law professor and resident American Bankruptcy Institute scholar Jean Braucher said that when the economy starts to improve, people "realize they have assets that they now are in a better position to protect."

Of the 9,927 bankruptcy petitions filed in Utah during the first half of this year, Sime said 66 percent sought Chapter 7, which involves a trustee liquidating a debtor's assets and distributing the proceeds to creditors. The remaining 34 percent sought Chapter 13, which gives debtors — typically wage earners — the opportunity to formulate a plan to repay their obligations over time.

steve@sltrib.comTwitter: OberbeckBiz —

Considering filing for bankruptcy?

The U.S. Bankruptcy Court for Utah's website at offers a list of frequently asked questions. Click on the "Public Resources" tab to access the information. —

Need financial counseling?

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 requires consumers seeking bankruptcy to get credit counseling before they file and then take another personal financial management class before their cases can be dismissed. The U.S. Bankruptcy Court for Utah's website at offers a list of approved credit counseling services. Click on "Credit Counseling/Debtor Education."