New bankruptcy filings in Western New York accelerated their month-by-month decline in July, falling by more than 30 percent from a year ago.
New cases for the combined Western District of New York -- including both the Buffalo and Rochester areas -- fell 30.2 percent in July, to 511 from 732. That's the fourth-lowest total for any month in at least a decade.
That was led by a 33.5 percent drop just in the Buffalo court, to 322 filings from 484 -- the fifth-lowest total of any month since at least 2002. Filings in the Rochester court dropped 23.8 percent, to 189 from 248.
It's the 14th straight monthly drop for the entire district, which has seen filings fall in 18 of the last 19 months, since the start of 2010.
Nationally, filings fell 18 percent in July to 113,470, and were even down 5 percent from June 2011, according to the American Bankruptcy Institute, citing data from the National Bankruptcy Research Center.
"The consumer bubble has burst," said bankruptcy attorney Jeffrey Freedman. "We're moving toward an economy that depends more on investments and production and less on consumption. Fewer people are getting over-extended on credit, therefore, bankruptcy filings continue to drop."
Freedman noted that, according to Federal Reserve data, discretionary spending is down almost 7 percent per capita, compared with past recessions when such spending never fell more than 3 percent and consumers used credit cards and home equity lines of credit to get through hard times.
He said he sees less credit being given out to his clients in general, with fewer credit card solicitations and more difficulty being approved for mortgages.
And a new state law automatically provides more protection against creditors seizing the first $2,000 in a bank account, so debtors aren't rushing to file bankruptcy as an alternative.
"There is some evidence that more Americans are changing their spending habits and becoming more frugal," said bankruptcy attorney Barry Sternberg, who has three offices in Erie and Niagara counties.
But another major reason for the decline is even more disturbing: Debtors can't even afford the filing fees.
"They simply can't come up with $1,000 or $1,500," said bankruptcy attorney Peter Grubea, who says one-third of the people who contact him end up filing for protection. "It's not like they go to someone else. If people can't pay their normal expenses that's a big chunk of money to come up with."
And he said attitudes toward debts, collectors and bankruptcy have changed, especially since people feel like "everybody's getting bailed out," so "why should I pay my bills anymore?"
"People just don't care as much as they used to," Grubea said. "I know that from talking to collections agencies. They're having a hard time making a living, too. No one's paying."
For the year to date, through July, filings districtwide are down 20.2 percent, to 4,315 from 5,404. That includes a 20.5 percent decline in Buffalo, to 2,776, and a 19.5 percent fall in Rochester to 1,539.
Carl L. Bucki, chief judge for the district, said no single factor can explain it. He noted that Western New York "has avoided the harshest effects of the recent recession" compared with certain parts of the country. He cited the low foreclosure rate locally, the 2005 changes to the bankruptcy code, and increased consumer education over the past decade, particularly in schools, that may have changed the decisions people make.