By Amy Higgins
The Cincinnati Enquirer

A rough economy drove another 12,884 Greater Cincinnati residents into bankruptcy courts in 2002 - setting a record for the number of Tristaters going broke.

Experts attribute the 3.1 percent gain in local bankruptcy filings not just to rising consumer debt, but to falling incomes and a declining ability to pay those debts.

"You file for bankruptcy when you have more debt than your income can handle," said Stu Feldstein, president of SMR Research, a consulting firm specializing in bankruptcy issues. "The usual problem is that you're counting on income, but then something unexpected happens."

For many, that might have been getting laid off. Unemployment rose in Greater Cincinnati from a monthly average of 3.9 percent in 2001 to 4.7 percent in 2002.

But for David Ulm of North College Hill, it meant going three months without a paycheck last summer, while bills continued to mount.

"Filing a bankruptcy is obviously nothing anybody, especially at my age, wants to do, but the bills got so staggering," the 61-year-old mortgage broker said. "I've never in my life gone that period of time without a paycheck."

His business slowed in May to where no loans were being closed - and that meant his 100-percent commission salary didn't get paid until business picked back up in August. But by that time, the bills were $50,000 to $60,000 more than he could afford to pay.

"We just got so far behind," he said. "And credit card companies don't want to hear excuses."

Indeed, such problems also led to almost 1.6 million bankruptcies nationwide last year, also setting a record high.

Bankruptcy filings nationally outpaced the growth in Greater Cincinnati by rising 5.7 percent over 2001. Personal bankruptcies account for the vast majority of all bankruptcies, 97.6 percent in 2002.

Despite the record numbers, the bankruptcy growth rates are much slower than 2001, when Greater Cincinnati bankruptcy filings jumped 31.2 percent and filings nationally rose 19 percent.

Experts say bankruptcies spiked in 2001 in part because of a congressional effort to make escaping credit card debt more difficult for consumers. That legislation died at the end of 2002 and has not been reintroduced.

Still, some say that the economy and American spending habits will keep bankruptcies growing.

"With historically high levels of consumer debt and many public companies in financial distress, we expect 2003 to continue this pace," said Samuel J. Gerdano, executive director of American Bankruptcy Institute.

E-mail ahiggins@enquirer.com.