Sara Murray wrote an interesting article in the Wall Street Journal discussing the high rate of bankruptcy filings in the states hit hardest by the housing crisis. As home values in states like Nevada, Arizona and California continue to plummet, more consumers turn to bankruptcy as a way to escape looming personal guarantees.

Below are excerpts from the article:

Personal bankruptcies soared last year in Western states hit hardest by the real-estate bust.

In states such as California, Arizona and Nevada, where housing prices soared and then collapsed during the past decade, consumer bankruptcy filings rose roughly twice as much as the national average increase of 32%. Homeowners fell behind on mortgages and could no longer tap into their home equity to pay down other debts.

“There’s a close relationship between high levels of household debt, including mortgage debt, and bankruptcy filings,” said Samuel J. Gerdano, executive director of the American Bankruptcy Institute, a research organization made up of attorneys, accountants and other bankruptcy professionals. “That…has been exacerbated by the bursting of the housing bubble.”

In Arizona and Nevada, where bankruptcies increased most, filings skyrocketed by 79.6% and 59.5%, respectively. Nearly 6.2% of mortgages in Arizona and 9.4% of mortgages in Nevada were in foreclosure by the end of the third quarter of 2009, according to the Mortgage Bankers Association.

California saw personal bankruptcy filings rise 58.8% last year. At the end of the third quarter, some 5.8% of loans were in foreclosure there.