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First three quarters of 2014 show continued decline in bankruptcy filings

Buffalo, NY — Locally, consumer bankruptcy filings reported by the U.S. Bankruptcy Court Western District of New York showed a decline of 9 percent.

Nationally, with a 15 percent drop in August 2014 compared to August 2013 (the latest statistics available from the American Bankruptcy Institute {ABI}) the country is experiencing the largest year-over-year drop thus far. In 2014, filings have fallen every month over the same month in the previous year, and the ABI is predicting that for the first time since 2007, total filings will be below 1 million.

“This year, unemployment has significantly improved and interest rates have stayed relatively low,” said Jeffrey Freedman, managing attorney, Jeffrey Freedman Attorneys, PLLC.

Some debtors are running into problems however, with student loan debt.  Seniors, many of whom carry student loan debt for their own educations and for continuing education related to their employment; and individuals carrying private student loans who have become disabled and can no longer work face real challenges paying back student loan debt.  Private student loans make up about $104 billion of the $1.21 trillion in total outstanding debt for education.

“About three-quarters of single seniors get more than 50 percent of their income from Social Security, and for almost half of them, Social Security is 90 percent of their income,” said Christopher J. Grover, attorney, Jeffrey Freedman Attorneys, PLLC. “Seniors simply cannot afford to have their retirement benefits garnished to pay back student loans.”

Additionally, individuals living with a disability who have private student loan debts, have a difficult time getting payments reduced or waived because the industry is not required to handle the debt in the same way as government lenders.

“The federal government has rules for income-based repayment, forbearance and waivers for severe disability, but in the private sector, there are no requirements so it is up to the individual lender,” Freedman said. “Lawmakers are just starting to recognize these differences and to discuss making changes in the regulations.”