Las Vegas Sun

March 29, 2024

THE ECONOMY:

Bankruptcy filings surge in Nevada

Personal filings 38 percent higher in fourth quarter 2008 than previous year

Personal and business bankruptcy filings in Nevada surged in the fourth quarter, with the national recession compounding problems associated with declining home prices.

Numbers compiled by the Administrative Office of the U.S. Courts show Nevada bankruptcy filings jumped 38 percent, with 3,173 filings in the fourth quarter of 2007 and 5,132 in the fourth quarter of 2008. Nevada business filings jumped 44 percent, from 89 to 159.

Nationwide, quarterly filings increased 25 percent to 301,317, with a 38 percent increase in business filings to 12,901.

The Economic Policy Institute said the bursting of the housing bubble, which led to the foreclosure crisis and economic downturn, is likely behind the surge in bankruptcies.

Its analysis found that between 2006 and 2008, personal bankruptcies jumped 118 percent in Nevada and 15 other states with big home price declines vs. an increase of 58 percent in states without such declines.

"Since falling home prices reduce an owner’s ability to use home equity to manage financial distress and debt-related difficulties, we would expect bankruptcies to be more common in states with declining home values. The latest data show how strong that connection is,'' the institute said in a recent report. "Other factors contributing to bankruptcies include job losses, high credit card balances and costly medical expenses.''

"This finding supports the notion that people were using home equity as part of their personal safety net in times of crisis. With this option quickly disappearing, more people will be forced into bankruptcy court,'' the institute warned.

Besides Nevada, states with declines in home prices as reported by the Office of Federal Housing Enterprise Oversight were California, the District of Columbia, Florida, Michigan, Massachusetts, Arizona, New York, New Jersey, Ohio, Maryland, Minnesota, Rhode Island, Connecticut, New Hampshire and Hawaii.

The median price of homes sold in March in the Las Vegas area was $149,000, a 4.2 percent decline from February and down 39 percent from March 2008, the Greater Las Vegas Association of Realtors reported last week.

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