As posted yesterday, bankruptcy filings in both Rochester and Buffalo are way down the pace of filings from a year ago. What could be the cause? The local economy is no better – or worse – than a year ago, and as bankruptcies are a lagging indicator of a recession, bankruptcy filings ought to be increasing rather than decreasing as our higher unemployment rates drag on.
After my blog several local attorneys have pointed to a rather simple explanation as to why filings may be down: the anticipated change in exemption law. For six months now we have been waiting for New York to finalize the updating of the exemption law (see legislative updates for the latest). In the mean time, if a bankruptcy attorney is holding cases that would benefit from the change, this would decrease temporarily the number of cases being filed.
It makes sense to me. If every active bankruptcy attorney has four or five cases on backlog, that would account cumulatively for the drop in local filings. If so, anticipate a big upturn in early 2011, whether or not the exemption law is enacted.
My thanks to Rochester attorney Bill Neild for first suggesting this possible explanation to me.
Exemption Change Backlog?