It is a very frightening statistic to know that from 2002 to 2004 Utah was the number one state in the U.S. for consumer bankruptcies.

Dr. Jean M. Lown, from the consumer and human development department at Utah State University, lectured students and faculty on behalf of the Wheatley Institution Thursday about the dangers of debt and bankruptcy.

“Debtors look just like middle class Americans with families and children, but those regular people typically owe two to three times their annual income,” said Lown.

Lown, who presented “Dancing with the Devil: Bankruptcy in Zion,” explained that millions of Americans file for bankruptcy, and the number continues to increase. In 2005, over 2.03 million Americans were forced to file for consumer bankruptcy.

While the reasons vary, many Americans file in order to take advantage of the system, and bankruptcy works to their advantage. On the other hand, job loss, medical expenses, divorce or housing costs can many times be the causes to file.

Lown said the blame can also be attributed to irresponsible lenders and borrowers, lax lending standards and poorly educated consumers. One of the main concerns in Utah is that if 60 percent of the population is taught prudent financial management within the LDS church, why is Utah at the top of the list for bankruptcies?

“Utah has the most children, with the lowest per capita income, and the highest contributions in the nation. That’s a recipe for disaster if we get into debt over our heads,” said Dr. E. Jeffrey Hill, professor of BYU’s School of Family Life.

The process of filing Chapter 13 bankruptcy involves counseling, a filing fee, an attorney fee, meeting with a bankruptcy trustee and completing a financial education class. Lowe said that even though assets are exempt, the filing process can be lengthy and costly.

Lown has conducted research across the state of Utah and found that it rates 49th in per capita income. She also emphasized that contrary to other states Utah is very dependent on wages, which means that if there is no job, there is no income.

Lown said that there must be much more financial education in Utah if residents want to get off the top 10 list.

“Live within your means, create a budget and plan expenditures within the budget,” Hill said. “Avoid revolving consumer debt like the plague. Pay cash for a car. Borrow only for a modest home and perhaps education and when qualifying for a loan, be sure to count tithing as a financial obligation.”

Copyright Brigham Young University 30 Mar 2009