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Bankruptcy filings continue to decline locally and nationwide

Posted: September 02, 2011

Buffalo, NY – As bankruptcy filings both locally and nationwide continue to fall experts are seeking the reasons behind the trend, considering the extended recession and high unemployment. Filings in the Western District of New York fell 19.8 percent for the month of August 2011 compared to the same month in 2010, and the American Bankruptcy Institute (ABI) reported that nationwide, bankruptcy filings fell 11 percent in August 2011 compared to August 2010.

“According to ABI, filings are declining because consumer credit is tight and households are not using credit as much as they have in the past,” said Jeffrey Freedman, senior partner, Jeffrey Freedman Attorneys at Law. “But I think if you look deeper, there are other contributing factors.”

At this point in the recession, the unemployed are running out of unemployment benefits, and money is so tight many of them can’t afford the fees to file bankruptcy.

“After reform of the bankruptcy act in 2005, the cost of filing bankruptcy increased significantly,” Freedman said. “It’s an unfortunate situation because by filing debtors can usually save their cars, which they need in order to seek work and get to work if they get a job; keep their homes out of foreclosure; and stop the harassment of creditors.”

Locally, according to the U.S. Bankruptcy Court, Western District of New York, August filings were down 16.6 percent in the greater Buffalo area and 25 percent in the greater Rochester area compared to the same month in 2010. Overall, filings in the District have declined approximately 20 percent since the first of the year.

Unemployment benefits are now running out for many workers and the unemployed may have to turn to credit to live on, causing them to go deeper in debt.

“Fortunately Western New York’s unemployment rate ranks lower than the rest of the country, which is at 9.3 percent. However, we are still at 7.7 percent, and if you’re one of the unemployed it’s a tough time to find a job,” Freedman said. “Hopefully people who are under a lot of stress because of their finances recognize that bankruptcy is often the best solution for getting a fresh start and they won’t let the higher fees stop them from seeking the protection of filing.”

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