December 31, 2005
Section: National/New York State
Edition: Schenectady Albany; Final
More petition for bankruptcy in '05 Lawyers saw rush before law change
CAPITAL REGION -- In the two months before the mid-October enactment of the federal bankruptcy reform law, Randall Kehoe was swamped by debtors. During that period, the Albany attorney filed about 90 bankruptcy petitions with a federal court in Albany, ensuring that his clients would not be subject to the new law's less debtor-friendly provisions. However, since that Oct. 17 enactment date, Kehoe has not filed a single bankruptcy petition. "It's like a precipice," Kehoe said of the vertical drop in filing activity he saw after the Bankruptcy Abuse and Consumer Protection Act took effect. In October, the number of petitions filed with the U.S. Bankruptcy Court for the Northern District of New York in Albany reached an all-time monthly high of 3,053. In November, the figure plummeted to 61, according to the court's Web site. However, that drop in filing belies the immensity of bankruptcyDEBTORS A3 Debtors Continued from page A1 cases the Capital Region saw in 2005. This year will go down as one of the busiest in history for area debtors and their lawyers. As of late Friday afternoon, 10,427 cases had been registered with the court in Albany. That is 28 percent more than the 8,228 petitions filed last year and 23 percent more than 2003's recent record of 8,504, according to the court's Web site, which lists filing statistics back to 1996. "That was an anomaly. If the law didn't change you wouldn't have seen that many," said Paula Barbaruolo, president of the Capital Region Bankruptcy Bar Association. Although the year started with a moderate number of bankruptcy filings, that monthly pace jumped 35 percent in March, when the Senate passed the reform legislation. President Bush signed the bill in April. Passage of the law was a major victory for credit card companies, as it made it harder for people to erase their debts under Chapter 7 bankruptcy. The law made the bankruptcy process more time consuming and expensive by requiring debtors to receive counseling before filing petitions. It also holds lawyers more responsible for their clients' asset claims. At Kehoe's firm, the new law prompted the attorney to raise his service charge to $750 from $350, partly because of higher filing fees and partly because there is more work involved. With debtors needing to supply lawyers with more financial and counseling documentation, it now takes hours or days instead of a minimum 45 minutes to file a petition. Area lawyers say the post-Oct. 17 lull in filing activity will change as they and debtors grow accustomed to the new bankruptcy provisions. Barbaruolo said the number of filings will likely increase over the next six months and eventually stabilize at a level below 2005's record pace. "As far as what I see coming through my door, there's no difference in their situation," Schenectady attorney Laura Silva said of debtors. At Consumer Credit Counseling Services in Colonie, branch manager David Kline said he has seen no change since Oct. 17 in the number of people needing bankruptcy protection. He said many area debtors are suffering due to energy costs and higher minimum credit cards payments. "I filed more then than I ever did," Albany Attorney Guy Criscione said of the 58 petitions he submitted in the three days before Oct. 17. "It was a zoo. Since then, I've only filed a few. Much to my amazement, we're still getting calls."
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