Cases filed in U.S. Bankruptcy Court here jumped 44 percent during the first half of this year, compared with the same period last year, and observers say this year's total could hit 8,000 cases, pushing the level closer to the peaks seen in 2004 and 2005.

As of the end of June, 3,751 bankruptcy cases had been filed this year in the court's eastern district of Washington, which is based in Spokane. That compares with 2,592 cases filed here in the first six months of 2008.

Bruce Boyden, a bankruptcy attorney and court trustee here, estimates the number of filings here could shoot up as high as 8,000 this year. He says there had already been 4,115 cases filed in the 20-county district here as of July 21.

For all last year, about 5,500 bankruptcies were filed here. Back in 2004, 9,376 bankruptcy cases were filed here, and the following year, the number spiked to 11,500 cases, in response to changes in the federal bankruptcy laws. After that, the filings fell precipitously, to about 3,350 in 2006, but have been growing steadily since.

Meanwhile, in the Coeur d'Alene Court of the District of Idaho, bankruptcy filings in the 12 months ended in June soared 93 percent, to 992 filings, compared with the previous 12 months. In the month of June alone, filings were up 34 percent, to 95 filings, compared with June 2008.

Boyden says that not only are there more filings these days, but frequently the cases he sees come across his desk now are more complicated than before, as people who had a lot of wealth or business activities feel the effects of the down economy.

"There are a lot of people who used to be making a lot of money who aren't making money now," he says.

Boyden says that among the businesses he's seeing fail are many in the service and hospitality industries, which rely on consumer spending.

"We take away those little frills," such as hiring a lawn service, when the economy is down, he says. Boyden adds that a lot of personal bankruptcies are driven by business debts, because small-business owners often shore up their companies with personal loans and credit cards, leaving themselves vulnerable when times get tough.

A proposed bankruptcy law change that Congress had considered at the beginning of this year, but didn't enact, likely would have driven the number of filings up even further, Spokane attorney and court trustee Dan Brunner says.

Congress had considered passing new regulations that would have allowed bankruptcy judges to modify the terms of home mortgages, Brunner says. Judges already have the authority to alter the terms of any other loans, even for vacation homes, but not for primary residences, he says, adding that he hears that a similar measure could be introduced again in Congress later this year.

Even as it stands, filing bankruptcy triggers a court-ordered stay of any pending collection actions, including home foreclosures, but in a Chapter 7 liquidation filing, that stay only lasts the duration of the case, which is typically about 90 days, Brunner says.

In addition, in a Chapter 7 case, the debtor's residence could be liquidated to help pay off creditors if the debtor has a significant amount of equity in the home, Boyden says.