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2010 consumer bankruptcy statistics show WNY missed much of the pain of recession

Posted: January 05, 2011

Buffalo, NY – The U.S. Bankruptcy Court, Western District of New York (which includes greater Buffalo and greater Rochester), saw consumer bankruptcy filings defy national trends for the year 2010 with a 9.9 percent decline. Nationwide, filings reached the highest level since bankruptcy reform took effect in 2005, with a 9 percent increase, according to the American Bankruptcy Institute. Buffalo saw filings decrease by 9.6 percent and Rochester saw a decline of 10.5 percent.

Local declines, said Robert D. Manning, Ph.D., author of Credit Card Nation and founder of the Responsible Debt Relief Institute, are due to differences between the local economy and the rest of the country.

The Bankruptcy Reform Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005 was enacted by Congress to reduce bankruptcy filings, but with 1.53 million filings nationwide in 2010, the country is very close to pre-BAPCPA levels.

“These numbers show that the economy trumps the lawmakers,” said Jeffrey Freedman, senior partner, Jeffrey Freedman Attorneys at Law. “BAPCPA sought to tighten up our bankruptcy law because lawmakers were persuaded consumers were abusing the system. This recession proves that was an incorrect assumption. Bankruptcies increase when people lose their jobs and can’t pay their bills.”

Nationally, the unemployment rate is 9.8 percent, while Erie and Monroe Counties report rates of 7.5 and 7.4 percent respectively.

“Every source we’ve researched this past year, including the Federal Reserve Bank, has said that the reason bankruptcies are low in Western New York is that we have dodged the bullet of the deep recession that has hit the rest of the country,” Freedman said. “And the end-of-year numbers bear that out.”

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