Tennessee continues to lead the nation in the share of people going broke, and experts fear the slowing economy will push the number of bankrupt Tennesseans even higher over the next year.

The rate of personal bankruptcy filings in the Volunteer State during the first quarter of 2008 was more than double the national average, according to a report released last week by the Federal Deposit Insurance Corp. Neighboring Georgia and Alabama ranked second and third, respectively.

With the economy slowing this year, state economists expect a growing number of Tennesseans may have to seek debt relief in bankruptcy court.

“Tennessee tied for dead last in per capita income growth last year, and we expect we won’t see much improvement in the economy until we’re into 2009,” said Matt Murray, associate director of the Center for Business and Economic Research at the University of Tennessee. “With the rise in gas and food costs, a lot more people are going to have trouble making ends meet, and I suspect we’ll see even more bankruptcy filings.”

In Chattanooga, bankruptcy filings this year are running nearly 25 percent ahead of last year. While still below the peak levels reached three years ago prior to Congress revamping bankruptcy laws, the number of Chattanoogans seeking debt relief in the first four months of the year was up more than 64 percent this year from what it was two years earlier.

Nationwide, the American Bankruptcy Institute reports that filings have grown in each of the nine quarters since Congress restricted who could file for bankruptcy in 2005. With ho usehold debt rising, ABI President Samuel Gerdano predicts total bankruptcy filings in the United States will “surge past 1 million cases by year end.”

Chattanooga bankruptcy attorney Eron Epstein said bankruptcy filings have jumped along with the price of gasoline.

“It sort of follows the price of oil up,” he said of his bankruptcy business. “There’s been a significant acceleration this year, and the clients I am getting now are higher-income than in the past. It seems to be edging up on the income scale.”

Tom Ray, a 37-year bankruptcy attorney in Chattanooga, also said more people are filing for debt relief in federal court this year. Mr. Ray credits Tennessee’s creditor-friendly laws for pushing more people into bankruptcy and the greater use of Chapter 13 reorganization plans here for helping creditors recover more from bankrupt individuals and businesses.

“We continue to be a very pro-creditor state,” he said. “We have easy foreclosure laws, easy garnishments and low exemptions along with more aggressive companies offering home equity loans, title loans, pay-day lending and pawn shops. In other states that are less creditor-friendly and with fewer options, people are less likely to get into trouble and less likely to file for bankruptcy.”

The National Bankruptcy Research Center estimates that one of every 56 households will file for bankruptcy relief this year in Tennessee.

Tennesseans who do file for bankruptcy are more likely to repay at least a portion of their debts in bankruptcy court, according to court figures.

In fiscal 2007, Tennessee led all states in the amount of debts recovered by trustees in Chapter 13 reorganization cases. Tennesseans operating under Chapter 13 protection from creditors paid $541.5 million, or nearly 10 percent of the total payments nationwide. Georgia ranked third among the states by repaying $412.6 million last year through Chapter 13 payments.

Even much larger states such as California recovered less than half as much as Tennessee did last year, according to bankruptcy court figures.

The American Bankruptcy Institute reported that in 2007, 62.6 percent of all personal bankruptcies in Tennessee were filed as repayment programs under a Chapter 13 filing rather than liquidating a debtor’s assets under a Chapter 7 filing. Nationwide, only about 38 percent of all bankruptcies last year were Chapter 13 filings.

Chapter 13 of the Bankruptcy Code is typically used to budget some of the debtor’s future earnings under a plan through which unsecured creditors are paid in whole or in part, according to the American Bankruptcy Institute.