Bankruptcy filings have dropped in the area's federal bankruptcy court - about 7 percent -in 2010 from the year before, but area attorneys believe the number could stay the same or increase in 2011.
"I think it's going to be up this year," said Johnstown attorney Ellen Ross. "I've already had several inquiries [since the start of the year] from people who haven't filed and will be filing."
Jay Robeson of Brott and Robeson, also in Johnstown, said his firm was very busy with bankruptcies in 2010, but saw a slowdown in November and December. He said bankruptcy business also slowed in January.
Attorney Ellen S. Ross looks at a code and rules booklet about bankruptcy Thursday at her office in Johnstown.
The Leader-Herald/Bill Trojan
"That could be the fact that around the holidays people don't want to look at their legal issues," he said.
Robeson said the economy and high unemployment - 8.2 percent in New York state - have been the biggest factors driving people toward bankruptcy.
"We have seen more people behind on their mortgages and having to file bankruptcies to stop foreclosures," Robeson said.
He also said people carrying a lot of unsecured credit-card debt have been vulnerable to bankruptcy. They could have lost jobs or had hours or paychecks cut. Divorce and sickness also are factors.
"Going through divorces will devastate the income of a family," Robeson said. "We also see people with high amounts of medical bills that either don't have insurance or insurance payments won't cover it all."
Robeson also said a lot of people aren't in a position to have cash reserves and sometimes rely on credit cards to come up with money for emergency payments.
Out of the 3,447 new bankruptcy filings in the Utica division of U.S. Federal Bankruptcy Court in 2010, most were personal. There were 58 business bankruptcies filed in the division last year.
The Utica division is part of the court's Northern New York District.
"The economy has been so bad that people are more in need of bankruptcy," Ross said. "Plus, more people do their research online and people have discovered they are eligible for bankruptcy. There's a lot of do-it-yourself research going on. It's a good thing because we have more informed clients."
The previous year - 2009 -saw the court's highest number of new bankruptcy filings since 2005 with 3,716. There were 13,488 filings in 2005 as people rushed to file before Congress changed the laws making it harder to file for bankruptcy.
"When the change was announced, there were a lot of people who filed quickly," Ross said. "I was one of many people who experienced the increase before the change and then it fell off for a while."
Most bankruptcies - both personal and business - were filed under Chapter 7 of the Bankruptcy Code and most of the other personal bankruptcies - and some business filings - were done under Chapter 13.
According to court information, Chapter 7 provides for the sale of a debtor's non-exempt property with the proceeds being distributed to creditors. Chapter 13 provides for adjustment of a debt for individuals or businesses with a regular income. It also allows the debtor to pay back debts over time, usually three to five years.
Ross said most of the people she has spoken to seeking bankruptcy were eligible to file under Chapter 7.
Chapter 11 of the Bankruptcy Code provides reorganization involving a corporation or a partnership. Under Chapter 11, the debtor proposes a plan to keep the business alive and pay creditors over time.
Chapter 12 provides adjustment of debts of a family farmer or family fisherman.
Mike Zummo is the business editor. He can be reached at firstname.lastname@example.org.