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Bankruptcies continue to decline while consumer credit grows

Posted: January 12, 2012

Rochester, NY -- The trend of declining bankruptcy filings continued during the month of December, wrapping up a year of consistent decreases in bankruptcies filed both nationwide and locally. The greater Buffalo area saw filings fall 1.8 percent during December 2011 compared to December 2010, with the Rochester area down 12.4 percent for the same period. The Western District of New York declined 5.8 percent in December according to the U.S. Bankruptcy Court, Western District of New York.

During 2011, filings in the Western District declined 19 percent, with Buffalo down 18.2 percent and Rochester down 20.6 percent. Consumer filings nationwide saw an 11 percent decrease during 2011 compared to 2010, according to the American Bankruptcy Institute.

“We have speculated on the reasons behind these declines -- consumers seemed to be saving more and using credit less, and the cost of bankruptcy has increased so that many debtors cannot afford to file,” said Jeffrey Freedman, senior partner, Jeffrey Freedman Attorneys at Law. “Now we are getting reports that consumer credit is growing again -- up 10 percent in November 2011 compared to November 2010.”

According to the U.S. Department of Commerce, incomes are not growing significantly, so the jump in spending could result in more consumers struggling to pay their bills.

“Until the economy really begins to recover and unemployment decreases, more and more consumers will just have to endure the burden of high debts. Unless, of course, Congress sees that the Bankruptcy Reform Act of 2005 is not working for this economy and changes the law so that filing bankruptcy becomes affordable again,” Freedman said.

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