updated 5/23/2004 4:31:05 PM ET 2004-05-23T20:31:05

Personal bankruptcies rose 2.8 percent in the 12 months ending March 31, continuing the upward trend of recent years but marking a more moderate increase than in earlier months, data released Friday show.

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New personal bankruptcy filings rose to 1,618,062 from 1,573,720 in the 12 months ending March 31, 2003, according to the data from the Administrative Office of the U.S. Courts.

The upward trend has continued despite signs of recovery in the economy as effects linger from the consumer spending binge of the 1990s, and the historically low interest rates that encouraged borrowing and built up heavy household debt. The rate of bankruptcies generally lags behind direction changes in other economic indicators.

However, the rate of growth in new bankruptcies has recently slowed. Some economists say that is likely to continue as the effects of tighter credit-granting standards and the improving economy are felt.

Personal bankruptcies jumped 7.8 percent in the 12 months ending Sept. 30, 2003, for example.

Legislation making it harder for consumers to erase credit-card and other debts in bankruptcy court won speedy, overwhelming House approval in March 2003 and was endorsed by the White House. But the Senate has yet to act.

Proponents of the legislation say it is needed to stop abuse of the bankruptcy system by people who can afford to repay their debts. Banks, credit card companies and retailers, who have pushed for such legislation since 1997, contend that abuse penalizes consumers through higher interest rates and other charges passed on to them.

Consumer and civil rights groups and unions oppose the legislation, saying it is unfair to low-income working people, single mothers, minorities and the elderly and would remove a safety net for those who have lost their jobs or face mounting medical bills. Opponents blame the credit card industry for much of the rise in personal bankruptcies, saying the issuers make credit too easily available and flood consumers with solicitations to open new accounts.

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