Report: Atlanta leads the nation in bankruptcies

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Posted 8:03AM on Monday, February 4, 2002

ATLANTA - Metro Atlanta has the highest rate of bankruptcy among major metro areas, according to a newspaper's analysis of personal bankruptcy filings in more than 3,000 metro counties nationwide. Seven of every 1,000 metro Atlanta residents sought legal relief in the year ending Sept. 30 compared with five in Chicago, four in Dallas and two in Miami, The Atlanta Journal-Constitution reported Sunday using an analysis of U.S. Bankruptcy Court records from metro areas with more than 2 million people. Nearly 29,000 people in metro Atlanta filed for bankruptcy last year, up 14 percent from 2000. Nationwide personal bankruptcy rose in the past decade because of a record amount of consumer credit that was aggravated by the country's economic recession. Although final numbers haven't been released, 2001 is expected to set a record with 1.5 million personal bankruptcies nationally. Atlantans face bankruptcy because Georgia laws favor creditors, the metro area's culture promotes spending and aggressive marketing by bankruptcy attorneys, according to several experts. While bankruptcy is governed by federal laws, state laws on matters such as foreclosure can affect bankruptcy totals. Another big reason is Georgia's foreclosure law, which allows lenders to foreclose on homes without going to court. As a result, many people file bankruptcy to slow the process of losing a house. Foreclosures on mortgages of $250,000 or higher nearly doubled between the fourth quarter of 1999 and mid 2001 in metro Atlanta, according to the Mortgage Information Center. Georgia also makes it relatively easy for lenders to garnish wages, prompting debtors with reduced incomes to file for bankruptcy. Aside from legal differences, Atlanta's culture plays the biggest role, said Suzanne Boas, president of Consumer Credit Counseling Services in Atlanta. ``People come here with dreams and they think everything is possible,'' she said. ``They are surrounded by people telling them `Go for it!' This is seen as a city of opportunity.'' That often leads to apartment rents, home mortgages, restaurant tabs and credit card balances that often dwarf paychecks, Boas said. Jack Williams, a law professor at Georgia State University, said Atlanta's ``sophisticated consumer bankruptcy bar'' also cultivates bankruptcy filings. Many metro law firms charge affordable fees and process huge volumes of cases that they get from widespread marketing, he said. ``Where there is a lot of advertising, there is a higher rate of bankruptcy,'' Williams said.