Buffalo, NY — Nationwide and locally, bankruptcy filings continue to decrease. The U.S. Bankruptcy Court Western District of New York reported that during the first half of 2014, filings are down 14.6 percent for the District as a whole, 12.4 percent in Buffalo, and 18.4 percent in Rochester. June 2014 compared with June 2013 showed a decrease of 17.9 percent with greater Buffalo declining 15.2 percent, and greater Rochester down 23.3 percent.
The latest available statistics for the nation showed a decrease of 11 percent in May over the same month in 2013, according to data provided by Epiq Systems, Inc.
“The declines are consistent — for the past five years this has been the prevailing trend,” said Jeffrey Freedman, managing partner, Jeffrey Freedman Attorneys at Law. “Filing has become expensive and complicated, leaving many debtors struggling to pay their debts or just existing under a heavy burden of debt rather than seeking the fresh start offered by bankruptcy.”
Some of those most affected by the challenges involved in filing are students —who owe on average $29,400 in student loan debt. Currently, student loan debt, which has reached a total of $1.3 trillion — higher than credit card debt — is not dischargeable in bankruptcy. Senator Richard Blumenthal (D-CT) is advocating to Congress students be able to discharge their debt in bankruptcy. Economists say the high amount of debt carried by former students is preventing them from getting into the housing market, making large purchases or becoming entrepreneurs, major drivers of the U.S. economy.
“When you fall into default on any debt it damages your credit record, which means lenders will charge you higher interest rates on all large purchases including homes and automobiles,” Freedman said.
The student loan crisis is beginning to look very much like the mortgage lending crisis with companies managing the loans slow to devise loan forgiveness plans for borrowers who run into trouble, and robo-signing making it difficult for borrowers to restructure their loans, according to a recent article in the New York Times by Susan Dynarski.
“The majority of people who get over their heads in debt don’t file for bankruptcy. It is a last resort for those who have lost a job or experienced a similar life crisis and are under debt that is causing them devastating stress,” Freedman said. “This student loan issue is a matter of fairness. People who have worked and gone into debt trying to improve themselves should not be punished for that.”