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July 30, 2014

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Nevada leads nation in rate of bankruptcy filings

Two reports issued Thanksgiving week illustrated the U.S. recession's devastating affect on Nevada.

The Administrative Office of the U.S. Courts reported that nationwide, bankruptcies for the fiscal year ended Sept. 30 surged 34.5 percent to 1.4 million -- with Nevada posting the highest rate in the nation.

Nevada led the nation in filings for the year with a rate of 10.49 per 1,000 people, well above the national rate of 4.52 filings per 1,000 people.

In 2008, Nevada was No. 2 in the nation with a filing rate of 6.39 per 1,000 people and the national rate was 3.38 filings per 1,000 population.

In Nevada in the 2009 fiscal year, bankruptcy filings totaled 27,560 -- up 64.5 percent from 2008.

The numbers are in line with the state's unemployment rate of 13 percent, which has soared from 7.7 percent one year ago as the recession reduced travel to Las Vegas and dramatically slowed the state's construction and development industries.

Of the 27,560 Nevada bankruptcy filings, 881 were business filings and 26,679 were personal filings. The personal filings were dominated by 19,255 Chapter 7 liquidations.

Also, credit report company TransUnion.com issued third-quarter credit card delinquency statistics, with Nevada again leading the nation with a rate of 1.98 percent.

That's the ratio of bankcard borrowers 90 days or more delinquent on one or more of their credit cards and compares to the national rate of 1.1 percent.

The national rate was down from 1.17 percent in the second quarter.

Despite leading the nation in this category, Nevada's numbers improved from the second quarter (2.19 percent) and the first quarter (2.44) percent.

In terms of dollars, the average credit card balance in Nevada was down 3.16 percent from $6,517 in the second quarter as Nevadans reduced spending and banks limited lending.

TransUnion.com projected that by the end of the year, the rate in Nevada is expected to drop again -- yet still lead the nation at 1.9 percent. Nationwide, the rate is expected to remain steady through the fourth quarter at 1.1 percent.

The new forecast reflects slightly more optimism about credit card performance in Nevada and around the country. Just three months ago, the national rate was expected to hit 1.2 percent and Nevada's rate was expected to grow to 2.25 percent by the end of the year.

"For the first time in 10 years, third quarter national delinquency rates showed a decrease from the previous quarter, indicating a departure from the usual seasonal patterns. This movement could have occurred for a number of reasons. First, the national savings rate fell in the third quarter, possibly indicating continued consumer efforts to keep debt to a minimum and debt repayment under control in the face of an already depressed labor market. Consumers recognize that their credit cards are their primary purchasing vehicles in this economy," said Ezra Becker, director of consulting and strategy in TransUnion's financial services group.

Also, many banks modified credit card rules and fees in the third quarter in advance of the Credit CARD Act taking effect in February. That law includes provisions friendly to consumers -- for instance requiring payments to be applied to high-interest balances before low-interest balances.

"The long-range effect (of the law) is as yet unclear. In all events, it is anticipated that the market will experience a different lending dynamic and a material shift in the use of credit cards and market share across the industry. This recession has taught the U.S. consumer many lessons: shop around for the best deal, maximize the value of your spend and protect your day-to-day liquidity,'' Becker said in the statement.

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