Bankruptcy: how the debt crunch hits people, banks

''This wave of business bankruptcies,'' says a Louisville, Ky., banker, ''is the worst I have seen in my 25 years of experience.''

He meant this in two ways - the absolute number of bankruptcies, plus the spread of corporate failures across a wide spectrum of manufacturing and processing lines.

''The 1974-75 recession,'' he says, ''was very much directed at real estate, so far as bankruptcies were concerned. The trouble zeroed in on a specialty. This time the failures are much wider, both here and nationally. Some household names are beginning to close their doors.''

Corroborating evidence came from an official of the Bankruptcy Division, Administrative office, US Court -- the federal agency that tracks bankruptcies across the land.

''In fiscal year 1975,'' the official says, ''at the height of that recession , total business failures amounted to 30,130. The year before, when the recession was getting under way, the total was 20,747.''

Three times that number of firms went bankrupt in 1980 and even more in 1981 -- a total of 66,259. ''Failures in the first quarter of 1982,'' says the US court official, ''ran still higher -- 18,669, against 16,996 in the same period of last year.''

Statistics say little about what it must mean to individuals and families, when years of work and sacrifice to build a business go down the drain. The Louisville banker speaks of courage and dignity among those who finally close their doors.

The struggle to keep local shops, factories, construction firms, and farms alive is changing the nature of the banking business for this executive and those who work with him.

The productivity of the bank suffers, he says, because so much more time is spent -- not in selling new bank business -- but in shoring up old customers, or , when bankruptcy comes, trying to steer them through the liquidation maze.

''A tremendous amount of time is spent in the doldrums of this nonproductive work'' -- nonproductive, that is, from the standpoint of bank profits.

''Internal legal staffs of banks like ours have been increased,'' the banker says. ''We try to help, through easir credit terms or restructuring a loan, to keep someone in business who needs perhaps six months to turn things around.''

Personal bankruptcies also are running at a record clip, surpassing the pace of 1974-75, says Robert E. Gibson, president of the National Foundation for Consumer Credit.

In 1981, he says, 409,000 individuals filed for bankruptcy under the Bankruptcy Reform Act that went into effect Oct. 1, 1979. Half a million are expected to do so this year.

''The average cost to creditors of a personal bankruptcy,'' says Gibson, ''is of warning to society.''

Critics charge that the new bankruptcy act encourages debt evasion by making it easier for a person to declare bankruptcy and still keep one's home, car, and other property.

Some bankruptcy lawyers now advertise: ''Up to your neck in debt? We can help you out and you can keep your property.'' Such advertising, in Mr. Gibson's view , promotes the notion that no longer does bankruptcy hold stigma and threat.

Defenders of the law claim that, among other things, debtors are better protected from overly aggressive and abusive collectors than they were in the past.

A number of creditor groups, including the American Retail Federation, are pressing for revision of the law, to make it harder for those declaring bankruptcy to avoid future repayment of old debts. Losses to retailers through the bankruptcy of debtors is a business expense that creditors tend to pass on to all credit card holders as higher charges.

Whatever the merits of the case, most analysts agree that the new law has helped to promote a record flow of personal bankruptcies, but has had less effect on business bankruptcies.