(Host) Reports from Wall Street have been bleak this week. So, news that bankruptcy filings were down compared to last year might appear to be some good news.
But as VPR’s Nina Keck reports, experts say the reasons behind the decline are troubling.
(Keck) The number of Vermonters filing for bankruptcy this year has dropped dramatically – 30 percent fewer filings than last year.
(Kainen) "I think you very much need to look behind the numbers to see why that is."
(Keck) Attorney Michelle Kainen is chair of the Vermont Bar Association’s bankruptcy section. She says that while the number of people seeing her for a bankruptcy consultation hasn’t changed, fewer people are actually going through with the process.
(Kainen) "I think there’s a degree of apathy that’s just come over a segment of the population and they just don’t care anymore. They have just surrendered to their situation."
(Keck) Vermont Bankruptcy courts charge between 275 and 300 dollars in filing fees. Additional attorney costs can vary widely – from $500 to $2,000 for a fairly simple case or more, depending on what’s involved. Kathleen Walls, a bankruptcy attorney in Middlebury, says people just don’t have the money to pay that.
(Walls) "Which is really a shame because it leaves a lot of people without relief."
(Keck) Walls says that while declaring bankruptcy is not a cure-all, it may help people keep their cars, avoid foreclosure on their home, stop wage garnishment and end phone calls from creditors. Rutland attorney, Rebecca Rice, says that while the number of bankruptcies has declined this year, she thinks it will go back up.
(Rice) "What I’m seeing – and it gets worse and worse – is people who’ve been unemployed for so long."
(Keck) Unemployment benefits – many of which had been extended – are running out. And remember all the trouble some banks got in when it was learned that they had improperly filed foreclosure documents? Michelle Kainen says that may just have delayed bankruptcy for many Vermonters.
(Kainen) "So we’re all just wondering if there isn’t a bottle neck with lenders and once the documentation gets straightened out, that those will jut bust loose all of a sudden – that’s what I’m concerned about. And if there’s a flood of those all of a sudden the numbers will shoot back up quite rapidly."
(Keck) Bethel attorney Ray Obuchowski says he expects to see more retirees filing for bankruptcy. He says living solely on Social Security is nearly impossible and many older Vermonters end up overextending their credit cards.
With lawmakers in Washington promising to make deep cuts in many social programs, potentially even Social Security – he says a bad situation could get worse.
For VPR News, I’m Nina Keck.