Bankruptcies sink after new law.

Byline: Frank Norton

Apr. 6--RALEIGH -- North Carolina bankruptcy filings plunged this year after a law enacted in October made it more difficult for debtors to gain court shelter from creditors.

But the number of filings is expected to climb back near historic levels because, while the rules to access bankruptcy have changed, consumer indebtedness and demand for relief have not.

Filings in the state plunged 61 percent to 3,567 in the first quarter, compared with 9,142 a year earlier, according to Lundquist Consulting, a financial research firm in Burlingame, Calif. But since November, just after the stricter law kicked in, filings have begun marching back from about 20 per day to a daily average of 66 last month.

That trend will continue as long as debt burdens remain high, interest rates keep rising, and lawyers and people in debt gain fluency with the new rules, experts say.

"People still owe money," said Marjorie Lynch, U.S. bankruptcy administrator for the Eastern District of North Carolina. "We're going to see more people coming back into bankruptcy."

The federal bankruptcy legislation enacted in October placed new restrictions on moderate- and upper-income people seeking protection under Chapter 7 of the U.S. Bankruptcy Code, which wipes out unsecured debt.