Maryland has topped another list but this time it's not good news.
With a 42 percent increase in bankruptcy filings, Maryland comes in eighth on the American Bankruptcy Institute's "Top Ten List" which ranks the top states with the highest percentage increases of filings from a year ago.
New Hampshire came in first with an increase of 69 percent.
As of the third quarter ending Sept. 30, 13,632 individuals and businesses in Maryland sought protection from creditors under the U.S. Bankruptcy Code compared with 9,622 in 1990.
The majority of filings come from consumers. In Maryland, 12,005 petitions from individuals were filed under Chapters 7 and 13. Businesses filed 1,627 bankruptcy petitions.
Total figures for 1991 won't be available until February but officials believe it will be a record-breaking year both in Maryland and nationwide.
Bankruptcy filings throughout the U.S. are at their highest level ever with the total number well on its way to a record 1 million bankruptcies in 1991. Third quarter figures show that for the 12-month period ending Sept. 30, nationwide bankruptcy filings are up 22.5 percent compared with the previous 12-month period. As of the third quarter, 918,988 individuals and businesses filed for bankruptcy nationwide -- the highest number of filings ever recorded in a 12-month period.
"The rising level of bankruptcy filings in this country is quickly creating a bankruptcy crisis," said L. Edward Creel 3rd, vice chairman of the Washington-based American Bankruptcy Institute. "Our courts are dangerously overloaded, our current Bankruptcy Code may not be able to properly deal with the current problems . . . all these bankruptcies will result in additional burdens on already strained lenders, the tightening of credit for borrowers and an abrupt rise in the legal costs associated with complex bankruptcy cases."
Michael Kostishak, clerk for U.S. Bankruptcy Court for the District of Maryland estimates the courts will process 14,700 petitions in 1991, which would be an increase of 44 percent from the 10,219 filings in 1990.
When people or companies can't pay their debt, they can seek court protection in several ways. Under Chapter 7 of the current Bankruptcy Code, assets are liquidated and the proceeds distributed among creditors. Under Chapter 11, a business or individual is allowed to operate under court supervision to pay off creditors.
Under Chapter 13, which generally applies to individuals, the court approves a repayment schedule that often involves all the debtor's disposable income.
In an effort to deal with the upswing of bankruptcy cases, Congress is considering legislation which would establish a "blue ribbon" commission to review the 1978 Bankruptcy Code. Among the issues it may consider is amending the code
for certain commercial and consumer cases and adding a temporary chapter for small business reorganizations, according to the institute.