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Bankruptcy filings continue to fall during January

Posted: February 03, 2011

Buffalo, NY -- The month of January saw consumer bankruptcy filings continue to fall in both the Western District of New York and nationally. Nationwide, filings decreased by 22 percent in January compared to the previous month (December, 2010) according to the American Bankruptcy Institute (ABI). The national filings also represent a 9 percent decrease for the period January 1, 2011 to January 31, 2011 compared to the same period in 2010.

Locally, according to the United States Court Western District of New York (which includes the 17 counties surrounding Buffalo and Rochester), during the month of January filings fell 19.6 percent for the District, compared to December 2011. The greater Buffalo region saw a decrease of 19.7 percent and greater Rochester experienced a decrease of 19.5 percent.

“The national numbers in January -- a total of 88,773 filings -- were the lowest they have been since 2009,” said Jeffrey Freedman, senior partner, Jeffrey Freedman Attorneys at Law. “The decline in bankruptcy filings reflects the end of the `Great Recession’ which the National Bureau of Economic Research says ended in June 2009.”

Western New York saw declines begin in early 2010, and they have continued on that track, most likely because the economy in Western New York wasn’t affected as much as the rest of the country by the recession, Freedman said.

According to Joseph S. Tracy, executive vice president of the Federal Reserve Bank of New York, during most recessions real output slows, but in this past recession, real output, or consumer demand actually declined to levels below what it was in 2006. With households cutting back on purchases retailers were left with huge inventories and no demand for goods. The consequent cutbacks in production of goods caused the loss of 7.3 million-jobs. This brought employment to the level it was in January 2000. In a recent speech at Dominican College, Orangeburg, NY, Tracy noted, “the severity of the Great Recession is very apparent when you realize that an entire decade’s worth of job growth was lost.”

“The up side of this picture is that consumers did tighten their belts, cut their spending on credit, and started saving more to protect themselves against possible job losses and to recoup some of the wealth lost when homes lost value,” said Freedman. “So, in spite of the fact unemployment is still high, the fact consumers are being more responsible with their money is keeping them out of the bankruptcy courts.”

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