Friday, June 8, 2012

Bankruptcy filings up 3.2% from a year ago

Downward trend unaffected by rise

News Business Reporter
Published:June 8, 2012, 12:00 AM
Updated: June 8, 2012, 6:55 AM

For the first time in two years, new bankruptcy filings in Western New York rose slightly in May from a year ago in what may be the first sign that the level of new cases may be reaching a plateau.

New cases in the U.S. Bankruptcy Court in Buffalo rose 3.2 percent in May, to 422 from 409 a year ago. That’s the first rise locally since May 2010.

For the entire 18-county Western District of New York, which also includes Rochester, new filings rose 1.8 percent to 636 from 625. Rochester saw a drop of 0.9 percent, with 214 new cases compared with 216 a year ago.

The uptick doesn’t change the overall downward trend of the past two years. So far in 2012, new cases are down 9.3 percent for the entire district, to 2,842 from 3,133 for the same five-month period a year ago. In Buffalo alone, filings are down 9.6 percent, to 1,835, while filings in Rochester fell 8.8 percent to 1,007.

Local experts disputed whether the slight increase was a temporary blip in the downward pace, as the economy continues its slow recovery, or the first sign of a big change to come, with more consumers poised to seek court help with their debts.

“There are two differing opinions out there regarding bankruptcy trends,” said Buffalo bankruptcy attorney Jeffrey Freedman. But “there is no doubt that people affected by the recession are still in trouble financially” and may need “a more creative solution” than bankruptcy.

Freedman, the area’s No. 2 bankruptcy attorney by number of cases, said credit counseling agencies nationwide have been getting “a high number of calls from consumers in financial distress” and are “predicting that people have been putting off filing and that the time is coming for the dam to break, causing a new flood of cases.”

That’s happening locally as well, according to Consumer Credit Counseling Services of Buffalo in West Seneca. President and CEO Paul Atkinson cited rising credit card use — because new debit card fees are reducing the use of those cards — and student loan debts that “are getting way out of hand.”

At the same time, economic indicators are sending mixed signals about the recovery, as the nation’s gross domestic product rose only 1.9 percent in the first quarter, below expectations, while job growth has been modest.
By type of case, there were 484 filings in May under Chapter 7 of the U.S. Bankruptcy Code, which provides for both individual and business debtors to liquidate assets to pay creditors, erase any remaining unsecured debts and start fresh.

That included 328 in Buffalo and 156 in Rochester. All but 10 in Buffalo and five in Rochester were individuals. Another 143 cases were filed under Chapter 13, all from individuals. That included 87 in Buffalo and 56 in Rochester. And eight businesses filed under Chapter 11, with six in Buffalo and two in Rochester. Chapters 11 and 13 provide for businesses and individuals, respectively, to reorganize and develop a court-approved repayment plan over time.

So far this year in Buffalo and Rochester, there have been 2,100 Chapter 7 cases, 720 Chapter 13 filings and 20 petitions under Chapter 11. Only 84 were listed as business filings.

Geographically, the Buffalo court filings in May included 248 in Erie County and 69 in Niagara County, plus 46 in Chautauqua County, 24 in Cattaraugus County, 12 in Allegany County, 11 in Genesee County and six each in Orleans and Wyoming counties.

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