By MATT CHANDLER
Buffalo Law Journal

According to the latest round of figures released by U.S. Bankruptcy Court, things may actually be looking up for consumers suffocating under the weight of rising job losses and excessive debt - at least in the Buffalo Niagara region.

Nationwide, there were more than 1 million consumer filings in the first three quarters of 2009, the highest number of filings for such a period since changes to the laws in 2005 made bankruptcy both more restrictive and more costly.

While that may show continued national instability and uncertainty, in the Buffalo area, filings rose in September by just 8 percent, compared to a 41 percent increase nationwide.

Local professionals caution that filings are still on the rise. Many report that the circumstances behind the filings are changing.

Some, like Paul Pochepan, a lawyer with Jeffrey Freedman Attorneys at Law, say the numbers reflect a city that was already accustomed to poor economic conditions and thus not as hard-hit by the recession.

"Our economy here has been flat for a while, and the overall job losses aren't as great here as in the rest of the country," he said. "I think there is a certain mentality in Western New York that there has been this consistent lull in the economy here, and that sort of keeps everyone under control (when it comes to spending)."

Pochepan says he has seen a drop in traffic in recent months, an observation that supports the national data. He also says the types of cases are shifting to reflect the changing economic conditions.

"People are living exactly at their level of earnings and when there is any sort of drop in earnings or any type of catastrophe in their life, it really pushes them over the edge," he said. "A much smaller percentage (of clients) are overspending or making bad choices. We are dealing with situations here with more elderly clients getting into problems at the older age and not being able to climb out of it."

It is a sentiment that all of the bankruptcy professionals we spoke to echoed.

Roberta Keller, executive director of Chautauqua Opportunities Inc., says there is more to the story than reckless credit-card spending. Her organization counsels 65 to 70 people each month regarding finances.

"Probably about five years ago, when you saw the utility rates start to spiral, people on fixed incomes started using their credit cards to pay their utility bills," she said. "Nine times out of 10, it isn't exorbitant living that is being charged, it is things like children's doctor's appointments, gas, utilities."

Keller says while the numbers in Western New York may be better than the national average, her office is seeing an uptick in inquiries, and she sees the statistics as potentially misleading.

"You look at our unemployment, our bankruptcy, our foreclosures compared to the national numbers and then you consider housing value," she explained. "If our numbers are even close when the average median cost of a house is $74,000 when the rest of the country is $274,000, then you can see the deep economic impact on this area."

Keller says the fact that foreclosures continue to rise even though Western New York wasn't part of the housing bubble negates any positive spin on bankrupty filing data.

"You are talking about being unable to maintain a $70,000 house, and that is far more alarming that the national numbers," she said.

Buffalo lawyer Robert Radel, a solo practitioner who specializes in bankruptcy, says an 8 percent increase is still cause for concern. He cites a number of clients he sees who attempt to file for bankruptcy protection but are ineligible due to earlier filings.

"The people who were down and out and who really had problems at the end of 2005 (when there was a rush to file prior to the change in the law) are still down and out, and they don't have an option," Radel said.

He cites problems paying property taxes as a factor that's driven much of the increase in business he has seen recently. During the refinancing boom, Radel said, many people opted not to have their property taxes escrowed with their mortgage payment and soon found themselves thousands of dollars in arrears - and at risk of losing their homes.

"A bunch of people, good people who were paying their bills and thought they were doing a good job when they refinanced their homes," he said, "just didn't budget for their taxes."