The Great Recession is said to be waning, but you wouldn”™t know it from looking at local statistics on bankruptcy filings, which show that in 2010, filings are on track to nearly equal the pace of bankruptcies filed in 2009, when economic woes spiked after the financial collapse of autumn 2008.
Things are so bad, says one Hudson Valley attorney who handles bankruptcy matters, that some people can”™t afford to file for bankruptcy.
“There”™s a lot of pain out there,” said Stephen E. Butterfass, an attorney in Fishkill who handles personal bankruptcies. “Many people were overextended and they lost their jobs and haven”™t been able to resume working. And I am hearing from people who got mortgages on overly expensive houses and weren”™t able to maintain their payments.”
His account is backed by figures from the Poughkeepsie office of the United State”™s Bankruptcy Court for New York”™s Southern district, covering the counties of Dutchess, Orange, Putnam, Ulster, Columbia and Greene.
Figures show in 2008 for Chapter 7 liquidation bankruptcies there were 2,232 filings. For Chapter 11 business reorganizations, there were 19 filings. And for chapter 13 personal reorganizations, there were 719 filings.
In 2009, chapter 7 filings totaled 2,815 (up 583); chapter 11 filings accounted for 45 filings (up 26); and chapter 13 accounted for 885 filings (up 164).
Year to date in 2010, the Poughkeepsie office, chapter 7 filings have totaled 1,208, chapter 11 has seen eleven filings and chapter 13 has seen 414 filings.
Nationally, trends show a similar increase from 2007 through 2009. In 2007, chapter 7 filings totaled 413,300, Chapter 11 filings totaled 5,200 and chapter 13 totaled 276,650. In 2008, those figures rose to 560,015 for chapter 7; 6,971 for chapter 11; and 334,550 for chapter 13. Last year showed additional increases, at 819,362 for Chapter 7; 11,785 for chapter 11; and 370,875 for chapter 13.
And beyond those raw numbers are many would-be filers who can”™t afford to meet the tenets of a Chapter 13 filing, said Butterfass. “I”™m finding that more people are calling,” said Butterfass. “But many people don”™t have the fees to go through with it.”
He said that in addition to court filing fees and attorney costs, a Chapter 13 bankruptcy plan requires an in-depth repayment plan, which many strapped individuals or couples can”™t necessarily sign on to.
He said attorney”™s fees diminish as one moves north from Manhattan and may cost about $2000 to file a chapter 13 proceeding in Dutchess County.
He said that filing a chapter 7 proceeding requires a show of income eligibility, that is, an inability to meet debt obligations that is so severe  liquidation is the best way to at least partially repay creditors. Those who are not that poorly off may find themselves considering filing a chapter 13, which may allow retention of property but requires at least partial payment over 3 to 5 years.  But having assets enough to be classed out of filing Chapter 7 is no guarantee of being able to negotiate a Chapter 13.
“I am getting many more calls and I am finding many more people are being shunted into chapter 13 and when you tell them the costs they simple don”™t have it,” said Butterfass.
And he said that he doesn”™t expect a major improvement in the situation until employment prospects increase. “I expect the bankruptcies to keep going. I don”™t see a change,” said Butterfass. “It hits the middle class very, very hard. And I don”™t see it dissipating unless they replace the lost jobs, so people can find work. I don”™t see how it can improve otherwise.”
