Bankruptcy Filings Set New Calendar Year Record in 2003

Bankruptcy filings in the federal courts broke a record during calendar year 2003, according to data released today by the Administrative Office of the U.S. Courts. Total bankruptcies filed in the 12-month period ending December 31, 2003, totaled 1,660,245, up 5.2 percent from the previous record of 1,577,651 bankruptcies filed in the 12-month period ending December 31, 2002. The calendar year total for 2003, however, did not break the historic high for a 12-month period, which was reported for the 12-month period ending September 30, 2003, at 1,661,996. The overwhelming percentage of bankruptcy filings are non-business (personal) filings, totaling 1,625,208 in calendar year 2003, up 5.6 percent from the 1,539,111 personal bankruptcies filed in calendar year 2002. The number of business filings continued to decline, totaling 35,037 in 2003, down 9.1 percent from the 38,540 business bankruptcies filed in the 12-month period ending December 31, 2002. Large public company cases filed under chapter 11 fell to 142 in 2003, down from 191 in 2002.

Substantial Caseloads Continue to Fill Courts

In fiscal year 2003, the federal courts continued to experience high, and in many cases, record caseloads, according to statistics released today by the Administrative Office of the U.S. Courts. The number of bankruptcy cases rose 7 percent, appeals filed grew 6 percent and the number of criminal cases rose 5 percent.

Total bankruptcy filings for fiscal year 2003 reached a historic high at 1,661,996. The overall growth was due to an 8 percent rise in filings of nonbusiness petitions, which offset a 7 percent decline in business petitions. Nonbusiness petitions constituted 98 percent of filings in 2003. Increases in filings occurred under all chapters of the Bankruptcy Code except chapter 11. Chapter 7 filings, which were 71 percent of all petitions filed, rose 9 percent in 2003. The largest rise in chapter 7 filings occurred in the Northern District of Ohio, the Eastern District of Michigan and the District of Colorado. Chapter 13 filings rose 5 percent, with the largest increases occurring in the Eastern District of Michigan and the Northern District of Texas. Chapter 11 filings dropped 13 percent. The District of Maryland reported the largest increase in chapter 11 filings, from 150 in fiscal year 2002 to 441 in 2003, a 194 percent increase. Chapter 12 filings increased 117 percent, up 376 petitions, a growth that may be linked to retroactive extension of provisions for filing under this chapter.

The federal judiciary's fiscal year is the 12-month period ending September 30. Complete statistics for fiscal year 2003, compiled in the publication Judicial Business of the U.S. Courts, can be found at www.uscourts.gov, under Library/Statistical Reports.

Private Mortgage Insurance (PMI)-- What is it and why buy it?

Mortgage lenders are conservative by nature. In that spirit, before making your loan your lender will need to know that in the event they mustforeclosede the underlying real property will be sufficiently valuable to allow them to sell that property for enough to recoup their loan, interest, Attorneys' Fees, Court costs and, if necessary, the commission of a real estate broker. Knowing that the property has this kind of value is not only necessary to comply with the Real Property Settlement Procedures Act ("RESPA") and applicable regulations of the U.S. Department of Housing and Urban Development ("HUD"), it is also a must to satisfy the investors or shareholders of the lending institution, who will take their money elsewhere if they cannot achieve a satisfactory return with minimum risk.

Accordingly, your lender may require that you take out Private Mortgage Insurance (PMI) that would pay in the event of foreclosure. Generally your lender will charge for PMI if your down payment is less than 20% of the sale price or appraised value of the property. PMI can usually be eliminated once the principal balance of the mortgage reaches 80% of the sale price or appraised value – known as the "loan-to-value" ratio or "LTV."

If you're having trouble coming up with a 20% down payment, don't despair. You may qualify for other kinds of financing. Ask for mortgage broker or lender to look into alternative programs that may allow you to purchase without the need for PMI.

Loving the new, full-color, Blackberry RIM wireless device.

A new twist in e-mail security in the war against spam -- "challenge/response" e-mail.

I've asked before and I'll ask again: what is a "reputable" credit counselling service?

UTAH CREDIT COUNSELING SERVICE SHUT DOWN

Consumers who relied on Consumer Credit Counseling Service of Utah to handle their debt payments are being urged to contact creditors directly after the Utah Division of Consumer Protection temporarily shut down the agency Tuesday.

Participants in CCCS debt-management programs each month paid the nonprofit organization what they owed for all their bills. CCCS then forwarded payments to creditors from a trust account. The state is investigating why the trust account did not have enough money to pay all its clients' bills.

SOURCE: Knight-Ridder / Tribune Business News

UNEMPLOYED GIVING UP ON FINDING A JOB

The share of the U.S. population working or actively seeking a job has fallen to 65.9 percent, the lowest level in 16 years. Economists say the weak job market is causing people to give up their searches and drop out of the labor pool at an unusual pace. The effect is to hold down the unemployment rate, at 5.6 percent in February.

March figures were being released today by the Labor Department.

The economy, while growing, is failing to produce much new work to entice seekers. Just 126,000 net jobs were added in the past three months. The recovery is the weakest for job creation since World War II.

SOURCE; BKinformation.com; The Seattle Times

IRS AUDITS DECREASED IN 2002 BUT HIGH-INCOME TAXPAYERS WILL SEE INCREASE IN AUDITS THIS YEAR

Recent IRS statistics show a substantial decrease in the percentage of returns audited. Only 0.57% of all returns filed were audited in fiscal year 2002. That’s only about half the 0.99% audited in 1998 and only about a third of the 1.67% audited as recently as 1996. It’s simply a question of money and resource allocation. The IRS audit staff is down 29% from 1995, while the number of returns filed has grown by 13%. But the IRS has been redeploying those resources, however limited, to focus on business owners, those with investments and partnerships, and those with the big bucks.

However, taxpayers with incomes over $100,000 can expect higher audit rates in 2004 and beyond, according to new enforcement figures published by the IRS. The IRS reports that audits of higher income taxpayers, which it classifies as taxpayers earning more than $100,000, have jumped 52 percent since 2001. Across-the-board audits of all taxpayers increased 14 percent since 2002.