After climbing for three consecutive years, bankruptcy filings out of Albany didn’t change much in 2010, and there is little indication the numbers will drop in 2011, experts say.
There were 4,934 cases last year in the Albany office of the U.S. Bankruptcy Court, down 2.6 percent from 2009, but still higher than the previous three years.
“I don’t see it getting any better,” said Glens Falls bankruptcy attorney Edwin Adeson.
“The job market just still is not good, and the house values still aren’t going up and nobody can refinance.”
Adeson ended 2010 with 288 bankruptcy cases, the exact number as the year before. Credit card and medical bills continue to be the top problems for his clients, he said.
One change for 2010, though, was a shift to more Chapter 13 petitions, which he attributed to housing troubles.
Chapter 13 is an option for people who want to keep their homes because it gives them time to catch up on arrears. The success rate is about 50/50, he said, because the homeowner must make a new monthly payment that includes the back debt.
Saratoga Springs-based attorney Ronald Kim said bankruptcy doesn’t work for clients when they are too far behind on their mortgage and other bills, or haven’t fixed the problem that got them into trouble in the first place.
Cases that would have been Chapter 13 filings a few years ago now wind up in state court as foreclosure lawsuits, he said. His office has seen bankruptcies plateau and foreclosures spike from about two to 30 cases.
“If its huge amounts that have to catch up to, and you don’t have it, it’s not feasible,” he said of Chapter 13 restructuring.
Looking forward, Kim doesn’t expect bankruptcy and foreclosure to improve until unemployment does.
Christopher Nenninger, a Glens Falls-based bankruptcy attorney, agreed. He said his caseload has been steady, and that’s not likely to change right away.
“It’s the same stories and the same problems,” Nenninger said, noting he had more upper-middle class clients in the last year.
Nationally, consumer bankruptcies rose 9 percent in 2010 to the highest level since Congress overhauled the Bankruptcy Code in 2005, according to the American Bankruptcy Institute.
Samuel Gerdano, executive director of the institute, said he expects consumer filings will continue to rise in 2011.
“The steady climb of consumer filings, notwithstanding the 2005 bankruptcy law restrictions, demonstrate that families continue to turn to bankruptcy as a result of high debt burdens and stagnant income growth,” Gerdano said.
For December, U.S. consumer bankruptcies increased about 4 percent from the prior year, with a growing number of Chapter 13 filings.