The number of personal bankruptcies filed in the first quarter declined 5.8% from the year earlier, to 303,000 from 322,000, according to the American Bankruptcy Institute.

Though bankruptcy totals - personal and business - set records in 1997 and 1998, the number of personal filings began to subside in 1999, and the latest figures suggest the trend is continuing.

"The continued decline in bankruptcy filings adds fuel to the fire of those who believe that the bankruptcy crisis is over," said Samuel J. Gerdano, executive director of the bankruptcy institute in Alexandria, Va.

The decline "will probably continue … until there is any kind of economic downturn," he said, adding that spiraling interest rates could also reverse the trend.

Bankruptcies filed during the 12 months through March 31 totaled 1.3 million, an 8% drop from the previous 12 months, when filings totaled 1.42 million, according to the Administrative Office of the U.S. Courts. It was the second time in five years that bankruptcy filings did not set a record.

"Personal bankruptcies will continue to decrease," said Larry Chimerine, senior vice president and chief economist at the Economic Strategy Institute in Washington. "The level of consumer debt is not that high. It might look high, if people lose their jobs," but so long as the economy continues to thrive, consumer debt is unlikely to pose too large a problem.

Mr. Chimerine said it is noteworthy that people with low and moderate incomes are sharing in the general increase of wealth.

But James Chessen, senior economist at the American Bankers Association in Washington, took no comfort in the fact that bankruptcy filings are down. "There are still far too many bankruptcies," he said. "That is particularly troublesome if you look at the cumulative effect."

Since people cannot file for bankruptcy more than once, all bankruptcies are new cases, he pointed out. "There has to be a limit," Mr. Chessen said. "We are running through the pool of people filing for bankruptcy."

Some indicators suggest that U.S. households will be in serious trouble when the economy takes a downswing: Personal saving as a percentage of disposable personal income fell in April to 0.7%, from 2.4% for all of 1999 and 5.6% five years ago. Though savings are decreasing, investments are going up. Mr. Chessen said it is "increasingly difficult for banks to raise deposits because there are many competing investment opportunities. The stock market and mutual funds are still strong."

The pending bankruptcy reform could be another reason for the decline in filings, according to Sung Won Sohn, chief economist at Wells Fargo & Co. In anticipation of a change in the law, people might be more reluctant to file, he said. Media coverage of bankruptcy law may have educated consumers and bankruptcy consultants about the other options available for working out financial difficulties. "Everybody is more conscious about going to bankruptcy court and using bankruptcy as a financial management tool," Mr. Sohn said.

Ed Mierzwinski of the Public Interest Research Group in Washington, on the other hand, said that bankruptcy rates are not too high. "There is no problem that needs to be reformed," he said. "Falling bankruptcy rates show that bankruptcy reform is unnecessary."

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