Conservative spending helps keep bankruptcy filings on the decline
Buffalo, NY -- Consumers continued to be conservative in spending and using credit during the month of April, contributing to the ongoing trend of declining bankruptcy filings. According to the U.S. Court, Western District of New York (which includes the 18 counties surrounding Buffalo and Rochester), during the month of April filings were down 20.2 percent for the District, 25.1 percent for the Buffalo area, and 10.5 percent for the Rochester area.
"There have been reports that credit card companies are once again targeting high-risk consumers -- that is people who already have a lot of credit or who may be less sophisticated about managing their finances. The overwhelming trend, though, is that consumers are reducing their debt loads and are wary of taking on more credit," said Jeffrey Freedman, CEO, Jeffrey Freedman Attorneys, PLLC. "There are other trends, however, that could affect filings in the future."
Because of the poor job market students are staying in school longer and those who have lost jobs are retraining. While that particular segment of the population is not accumulating consumer debt, however, student loan debt is growing significantly. Last year student debt increased by more than $1 billion, Freedman said. Student loans are not dischargeable in 99.9 percent of bankruptcy cases, which could create serious problems for those who have large loans to pay off.
"Additionally, employers are keeping wages low, which has two effects. People are uncertain about the future so they aren’t spending on consumer goods, and students entering or re-entering the job market are finding it difficult to pay back student loan," he said.
An article in USA Today in March reported that mortgage debt has dropped more than 7 percent since early 2008, but there is concern banks and financial institutions are shifting lending to students and credit cards, which could result in economic issues just as serious as the mortgage loan crisis.
"Shifts in one area of the economy inevitably affect other areas," Freedman said. "Young people are putting off marriage and living at home longer, which means they are delaying forming their own households -- slowing home sales and sales of goods needed to set up a household. It all adds up to a plodding economic recovery."
Jeffrey Freedman Attorneys, PLLC has 13 offices in Western New York and Pennsylvania. The firm has represented consumers for more than 30 years and currently handles Bankruptcy, Social Security Disability, Personal Injury and Fair Debt Collection Practices Act cases.
For Further Information, contact Jeffrey M. Freedman at 716-725-1233, firstname.lastname@example.org