On the face of it, the recent decline in bankruptcy filings is good news for bankers. Bankruptcies cost banks billions of dollars a year in chargeoffs by credit card operations.

Even though the news is encouraging -- filings fell to 871,919 for the 12-month period ended March 31, from 893,259 the previous year -- the numbers are still very big.

Bank card issuers lose an estimated $3.5 billion a year from bankruptcies, with much of the loss attributed to fraud or abuse of the legal system. While banks and credit card associations have launched campaigns to discourage unwarranted filings, results have been slow to materialize.

Perhaps the best news is that annual filings never reached the million mark, to which they seemed to be moving inexorably through the 1980s.

The recent decline is encouraging, said Philip Corwin, director of retail banking for the American Bankers Association. "But the average annual rates are still running at very high levels."

Not Necessarily a Trend

James A. Comiskey, president of the Bank of Louisiana, had a typical reaction: "Louisiana's coming back strong. We took the hit back in the '80s and welcome a decrease. That would be good news to us. But the fact that it's small may not signal a trend."

People in the industry say bankers deserve some credit for the decline in bankruptcies.

"Bankers, for the first time, are recognizing that people are abusing the system," said Kenneth Crone, who spearheaded a bankruptcy prevention effort at Visa U.S.A., where he is vice president of issuer risk.

Tougher Standards

"Consumer credit grantors in general have been toughening up their credit standards because they have been burned by bankruptcies," added Mr. Corwin of the ABA.

Robert W. Johnson, senior research associate at the Credit Research Center at Purdue University, said "savvy creditors are learning how to weed out Potential bankruptcies through their scoring systems."

Mr. Johnson was referring to systems such as those developed by MDS of Atlanta and Fair Isaac & Co. of San Rafael, Calif., that help bankers predict potential bankruptcies and high losses.

"If you cut credit lines or don't issue new cards," Mr. Johnson said, "they are less likely to file for bankruptcy."

The actual chargeoff rate on credit cards has fallen by 0.1 percentage point so far this year, to 4.9%, said Robert Hammer, chairman and chief executive officer of R.K. Hammer Investment Bankers, Newbury Park, Calif.

"We know that 45% of net credit loss can be attributable to bankruptcy," he said. "If bankruptcies fall, then chargeoffs will fall."

Visa and MasterCard have been encouraging issuers to refer customers to credit counseling agencies if a problem is detected, And the program seems to be working.

Help for the Overextended

Last year, 906,000 sought help from affiliates of the National Foundation for Consumer Credit Counseling, an increase of 26% over 1991, said Don Badders, president and chief executive of the nonprofit group.

Mr. Badders said his typical client is 35 years old, makes $24,000 a year, owes $22,000, and has an average of 10 credit cards.

Of the people who come in, 9% are referred to legal aid because they have debt that cannot be repaid within 48 months. This proportion is down from 12% in 1991.

Avoiding the Courts

Lower interest rates also have made it possible for consumers, who otherwise might have opted for bankruptcy, to take debt-reducing steps instead. Many used home equity loans, with lower rates and installment payments, to pay off credit card debt.

"Consumers are coming in to get a plan to pay their cards off, not to file for bankruptcy," said Gerri Detweiler, director of Bankcard Holders of America, an advocacy group based in Herndon, Va.

Despite the apparent turn for the better, experts caution against complacency.

A recent survey of Visa issuers, for example, showed the average outstanding on a bankrupt's bank-card account has increased to $3, 1 00 in 1993 from $2,900 last year. The average chargeoff for non-bank-card bankruptcies, meanwhile, rose to $2,800 this year from $2,500.

|I don't think we'll ever get back to levels of pre-1979 [when the bankruptcy law changed]," said Mr. Johnson of the Credit Research Center.

"It seems like bankruptcy was a hot topic three years ago," said Suzanne Vesely, vice president of MDS. "Recently, it's not been given much attention. It seems like creditors have almost learned to live with it at the high level it's at."

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