LANSING -- Bankruptcy rates are soaring and financial officials in western Michigan are pointing their fingers at the slumping economy and aggressive credit card companies as the main culprits.
The number of people in southwestern Michigan who filed for bankruptcy soared 40.1 percent from 2000 to 2002.
"With the economy the way it is, people have cut back to 40 hours of work a week," said Shannon Judson, a certified credit counselor at Green Path Debt Solutions in Muskegon. "People are making just enough, or not enough at all to pay for their priorities, but they don't have enough to pay off their credit cards."
Judson said that Green Path has been booking about eight to 12 counseling appointments every day for the last two years.
Daniel LaVille, a clerk of the U.S. Bankruptcy Court for the Western District of Michigan, in Grand Rapids, said the number of filings in the Lower Peninsula has increased from 10,313 cases in 2000, to 14,635 cases in 2002.
"We have over doubled our number of filings since 1995 without any increase in judges and a very small increase in staff, " he said.
LaVille said the three judges serving five court sites in western Michigan -- Grand Rapids, Kalamazoo, Lansing, Traverse City and Marquette -- each has about 5,000 bankruptcy cases pending.
"This is the busiest I've ever been in my 27 years of practicing bankruptcy law," said John Raven.
The Greenville attorney also said that layoffs of furniture powerhouses Steelcase Inc., and Haworth Inc. is a large reason why he has so may clients from Greenville and the surrounding areas.
Raven said he gets at least two to three inquiries about bankruptcy a day and takes one client daily. He has handled over 300 cases last year he said.
Raven added that about 70 percent of his clients are in bankruptcy because of credit card debt. He identifies the remaining factors as unemployment, illnesses, medical insurance and tax problems.
Green Path's Judson said even if the economy does improve, people need to learn to manage their money better or the trend will continue.
"The credit cards were a Band-Aid to help people alleviate financial burdens during tough economic times, " he said. "Now when the economy isn't improving as quickly as they thought, people are in trouble."
© 2003, Capital News Service, Michigan State University
School of Journalism
© 2003, Capital News Service, Michigan State University School of Journalism