WASHINGTON – Almost two years after lawmakers amended the U.S. Bankruptcy Code to reduce filing rates, several regions in the Southeast continue to see elevated numbers of consumer bankruptcy cases, a phenomenon some experts attribute in part to local culture.

Bankruptcy numbers over the past few months appear to be slowing down or leveling off in many regions. More than 73 percent of the nation’s federal court districts saw bankruptcy filings drop between May and June, according to Jupiter eSources, a company that tracks bankruptcy data. But bankruptcies continue to climb or remain elevated in the three highest-filing states in the country _ Tennessee, Georgia and Alabama.

In Tennessee, 5.8 residents out of every 1,000 file for bankruptcy on an annual basis, compared with the national average of 2.52 per 1,000. In Georgia and Alabama, the rates are 4.87 and 4.77, respectively.

Some experts say the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 may have little effect on filing rates in states with chronically high bankruptcy rates. Economic and social factors such as low paying jobs and high divorce rates often lead to financial hardship, but local bankruptcy experts say the sheer frequency of filings may also be whittling down the social stigma of filing.

“If your neighbor does it, it’s more likely you will do it,” said Dena K. Wise, a family economics specialist at the University of Tennessee. “It may be that (bankruptcy) has become something common among some certain neighborhoods.”

Economic conditions play an important role in bankruptcy filings. But economics alone don’t explain the high rates in some southern states. Mississippi and Louisiana, for example, have the nation’s highest poverty rates. Yet the rate of consumer bankruptcy filings in those states is lower than in Georgia, Tennessee and Alabama. Mississippi’s rate is 3.46 filings per 1,000 people. Louisiana’s rate is 2.88 per 1,000.

Bankruptcy scholars offer two alternative explanations: the declining social stigma of filing for bankruptcy in some areas and the habits of local lawyers. Bankruptcy expert Robert Lawless, a law professor at the University of Illinois, said that many local lawyers tend to adhere to old filing traditions and may not consider alternative options.

No matter how poor an area is, Lawless said, lawyers are most often the figures guiding financially distressed residents through legal options. The recommendation for clients in financial distress is often Chapter 13 bankruptcy, which allows people to gradually pay off their debts.

“I think it’s a professional culture, for the amount of times Chapter 13 is used, especially in Alabama and Tennessee,” Lawless said. “Chapter 13 drives the professional culture.”

Financial experts such as former Federal Reserve Chairman Alan Greenspan have suspected for years that declining social stigma is a cause of rising bankruptcy rates. During his testimony over bankruptcy code amendments which began in 1999, Greenspan told Congress that “personal bankruptcies are soaring because Americans have lost their sense of shame.”

There is no direct way to measure stigma, but its presence can be calculated through other social behavior, according to scientists. A 2006 study by the Federal Reserve Bank of Kansas City found certain social characteristics, including divorce rates, poverty and even religion can affect a population’s stigma toward filing.

Tennessee, Georgia and Alabama all boast divorce rates between 12.2 percent and 10.8 percent _ higher than the national average, according to the U.S. Census Bureau. All three states are among the poorest in the nation, with up to 17 percent of the state population living in poverty: almost four percentage points above the national average.

Annual income rates in some areas are as much as $10,000 below the $46,242 national average. Those characteristics suggest bankruptcy stigma may be dwindling in these high-filing states, some experts say.

The Federal Reserve study found that access to legalized gambling is also an important determinant of bankruptcy filings. The farther a county is from a casino, the lower its personal-bankruptcy filing rate is likely to be.

Gambling isn’t legal in Tennessee, but residents of the Big Bend State are known to trek to casinos just south of Memphis on the Mississippi border. Shelby County, home to Memphis, has the highest bankruptcy rate of any county in the country, according to Tennessee officials. In Georgia, riverboat casinos have gained popularity over the past few years, and Alabama boasts several Indian casinos and horse tracks.

Some states that don’t struggle with poverty may have high numbers of residents without health insurance. Nevada, which ranks among the 10 states with the highest bankruptcy-filing rates, has a much lower rate of poverty than the national average. However, according to the Kaiser Family Foundation, more than 18 percent of its residents are uninsured _ three percentage points above the national average.

Many bankruptcy experts suggest the choice to file bankruptcy may have significant religious undertones in Bible Belt states. The most popular filing choice, Chapter 13, gives debtors a chance to repay creditors, a characteristic in line with the Biblical teaching concerning responsibility and forgiveness, experts say.

In Tennessee’s Shelby County, Wise helps Chapter 13 trustees train volunteers to become financial coaches for struggling local families. Many of the recruits are neighborhood ministers, she says.

Both Alabama and Tennessee played leading roles in the development of Chapter 13 bankruptcy, which was widely encouraged by prominent state politicians. According to southern bankruptcy lawyers, coaching clients to file for bankruptcy has been ingrained in the legal culture for decades.

Chapter 13 was established with the Chandler Act of 1938, which was named after Rep. Walter “Clift” Chandler, a former Memphis mayor and staunch bankruptcy advocate.

“It was viewed as a way to get bills paid,” said Ben Sissman, a Memphis bankruptcy attorney. “Tennessee lawyers got interested, judges got interested, and bankruptcy became more practical for people.”

Like Tennessee, Alabama also had an aggressive introduction of Chapter 13 by lawyers in 1930s, according to University of Alabama law professor Gene Marsh.

“Chapter 13 was always seen as a custom; a way for people to get out of trouble,” said Marsh. “So it’s not a surprise the bankruptcy rate is where it is. Folks have always been fairly comfortable with it because everyone else uses Chapter 13.”

The already-high rate state has seen an even bigger spike in filings since the subprime mortgage crisis erupted late last year.

“Alabama has always been gung-ho in the subprime lending area,” said Marsh. “We like our grits, our collared greens and our subprime lending. Add in Chapter 13 and you’ve got trouble in River City.”

In Georgia, states laws regarding mortgage defaults have contributed to high foreclosure and bankruptcy rates, according to experts. State laws give home owners who default on their mortgages less than one month after receiving a foreclosure notice to stop the liquidation of their home, sending defaulters scrambling to file for Chapter 13 protection.

A service of the Associated Press(AP)