New chapter 7 filings were down once again in the month of June 2011. This continues an ongoing trend throughout the Country, but which appears to be accelerating in the Western New York region. Locally, chapter 7 filings were down 21.9% last month as compared to June 2010. In May, the filings were down more than 30%.
While many see this as an “obviously” positive trend, we do not necessarily agree. We do not think the drop in filings means that consumers are better off. Rather, we think it is a reflection — at least in part — of consumers taking a less active role in their finances. We are actually receiving the pretty much the same number of calls that we did last year, but the number of people actually filing cases has decreased. Why? It could be that people are so strapped that they cannot come up with the fees to pay the bankruptcy attorney — even fees as affordable as the $750-$900 typically charged by our office. For someone living from check to check, even this seemingly small amount of money can seem overwhelming. I am convinced that many people who need bankruptcy relief don’t file for this reason alone. In fact, if I had to guess, I would say about half of all potential clients fall into this category.
There is another category of consumer that is no longer filing bankruptcy: the consumer who has adopted the belief that paying bills may simply does not matter any more. They see the Government handing out endless bailouts to businesses and others, and these people may think that there are (or could be) similar bailouts for them just around the corner. They may also perceive this as an issue of findamental fairness: Why are homeowners with $750,000 houses in Las Vegas getting financial relief when they can’t get even the slightest help with more important bills such as medical bills and utlilities. It is certainly a valid question.