Lesley Stedman Weidenbener, writing for the Louisville Courier Press, reports that bankruptcy filings are up nationally more than 30% in the past year and that Indiana’s filings were among the highest in the country (the Governor’s “hot streak” notwithstanding. Incidentally, the “hot streak” language has been removed from the Governor’s bio at the state web page but is still in the Google cache. “Indiana is on an economic hot streak, thanks to Governor Daniels’ strong leadership and the pro-active business-minded skills he brought to state government[.]” )

Where was I before I got distracted by that “hot streak” talk? Oh, right. Bankruptcies. Indiana has a lot of them. Indiana is 5th in the country with 5.9 per 1,000 residents, compared to a national average of 3.4 per thousand. This is the 12th straight year Indiana has been in the top 10.

Medical costs, foreclosures, rising unemployment and the loss of high-paying manufacturing jobs are to blame for the climbing numbers locally and nationally, economists and bankruptcy attorneys said.

One cause of Indiana’s higher rates is that apparently Indiana has a higher incidence of people owning homes they can’t afford, resulting in foreclosure and bankruptcy. An interesting fact of which I had not been aware until recently is that many states do not allow deficiency judgments on mortgage foreclosures. In Indiana, your lender will sue to foreclose on your house, get a judgment for the outstanding balance, sell your house at a Sheriff’s sale, and if the house sold for less than you owe, the lender will have a personal judgment against you for the balance. In some other states, non-recourse loans are apparently more common where the lender can’t do more than sell the house. With no personal judgment against you for the deficiency, you’re less likely to file bankruptcy after foreclosure — and a lender is more likely (one would think) to evaluate the collateral more closely.

Our jobless rate also doesn’t tell the full story of our state’s economic health. There are a significant number of people who are employed but in worse paying jobs. Jobs have shifted from high paying manufacturing work to lower paying health and retail jobs. Those jobs tend not to have health benefits which results in an exacerbation of the main reason for bankruptcies: medical bills.

Carol Rogers of the Indiana University Business Research Center points out that Indiana also ranks pretty low on health measures with bad rates of smoking and obesity. On the one hand – yes. Healthy living is important, and Indiana needs to do a lot, lot better. We need to change our culture by promoting fitness. We need to design our communities with an eye toward running, biking, and generally being active. On the other hand, I’m always a little leery of this line of conversation when discussing medical costs. Our medical system is poorly designed, and not just because we’re a bunch of fat, lazy smokers who could afford our medical bills if we weren’t so damn fat and lazy. Obviously Ms. Rogers didn’t say this, but I’ve seen any number of conversations on medical costs head in this general direction.

So, generally speaking, Indiana is in a hole and we need to figure out how to get out of it.