By Amy Higgins, The Cincinnati Enquirer
and the Associated Press

Even though more Americans filed for bankruptcy in January through March than in any other three months in history, fewer of those were in Greater Cincinnati.

Filings in the Cincinnati and Covington bankruptcy courts in the first quarter fell 0.9 percent compared with the year before. Nationally, total filings jumped 9 percent to a record-setting 412,968 first-quarter bankruptcies.

The upward trend had been expected to continue this year in the sluggish economy and as effects still linger from the consumer spending binge of the 1990s.

"There is still a big slug of individuals with problem debt still working their way through the (bankruptcy court) system," said Samuel Gerdano, executive director of the American Bankruptcy Institute, a group of judges, lawyers and experts.

Greater Cincinnati's 3,055 first-quarter bankruptcies were fairly even with last year's 3,082 first-quarter filings because local employment has held fairly steady, Cincinnati bankruptcy attorney Bob Goering said.

"Here in Cincinnati, there haven't been any really major layoffs in the last six to eight months," he said. "We don't normally have the big employment swings as do other areas of the country."

As is normally the case, most bankruptcy filings were by individuals.

Consumer debt has reached record levels in recent years. But Federal Reserve data showed that consumers became more cautious users of credit last year, expanding their borrowing at the slowest pace in a decade. The rise in credit card and other revolving debt was the smallest increase since the Fed began keeping records in 1968.

Consumer borrowing rose by just 3.3 percent in 2002, a marked slowdown from the 6.9 percent increase posted in 2001.

The House and Senate last year approved legislation to overhaul bankruptcy laws to make it harder for people to erase debts in bankruptcy court, and President Bush signaled he would sign it. Sharp partisan differences over abortion, however, doomed a House-Senate compromise in November's lame-duck Congress.

A similar bill overwhelmingly cleared the House in March, but the legislation faces less favorable prospects in the Senate. Banks and credit card companies have been pushing the legislation since 1997.

The new data showed that most filings during the three months ended March 31 continued to be under Chapter 7 of the U.S. Bankruptcy Code, which lets people dissolve credit card and other debts. Chapter 7 filings totaled 290,909, up 9.7 percent.

In return for having their debts erased, people in Chapter 7 cases often turn over their property to bankruptcy trustees, except for necessities such as a car, clothing, work tools and possibly some equity in their homes, depending on state laws. Property with value is sold to pay creditors.

The federal courts agency noted that no new bankruptcy judgeships have been created since 1992 to handle the increased workload. The bankruptcy overhaul legislation would authorize 29 new permanent bankruptcy judgeships and seven new temporary judgeships.

E-mail ahiggins@enquirer.com.