Region ranks high in emerging from bankruptcyBy Philip A. Vanno
October 6, 2014
While no one ever wants to have to file for bankruptcy, those who find themselves in that situation locally can at least take solace in the fact that they are in good hands.
According to Administrative Office of the U.S. Courts, the Northern District of New York State, Oneida and Herkimer counties rank ninth in the nation in terms of successfully emerging from Chapter 13 bankruptcy.
Out of the 2,360 cases closed in 2013 involving non-business debtors in the Northern District — which covers more than 30 counties in the Utica, Syracuse and Albany areas — 1,600 were completed. And that 67.8 percent completion rate was 5.6 percent higher than 2012.
“A financial fresh start is clearly within reach in upstate, provided the debtors obtain experienced counsel who can help them propose a feasible plan that provides the required treatment of creditors’ claims,” said Robert J. Rock, senior council for Tully Rinckey PLLC in Albany, who has been practicing bankruptcy law throughout the state for more than three decades. “We have an environment that doesn’t exist everywhere in the country.”
Since the enactment of the Bankruptcy Abuse Prevention Consumer Protection Act of 2005, debtors whose income exceeded certain levels have been required to file for Chapter 13 instead of Chapter 7, under which creditors generally are repaid through the liquidation of assets.
Under Chapter 13, debtors must pay back creditors in accordance to a court-approved plan of repayment, and might be able to save property that would have to be sold under Chapter 7, such as stocks, real estate investments and vehicles.
Amy Fierro, assistant vice president of lending at First Source Federal Credit Union, said the main reasons people find themselves filing for Chapter 13 are because of job loss, divorce or catastrophic illness, and not because they have been careless with credit. She said that while there often is a stigma attached to bankruptcy, it actually can be a viable means of financial recovery.
“Sometimes, it’s the only option and it doesn’t have to be a bad thing,” said Fierro, who said 90 percent of First Source members who file for bankruptcy pay back all they owe. “The main thing is to keep a good relationship with the lender throughout the process … and not to fall back in to old patterns once you emerge.”
Chapter 13 repayment plans usually are completed in three to five years.
Rock, who has handled many cases in the Utica area over the years, said he believes the success rate is so high in the Northern District because of a combination of several factors, including judges who have been trustees and worked with trustees in the past, current trustees who are compassionate and willing to work with debtors, quality attorneys representing both sides who work in unison, and a population with a strong work ethic that doesn’t want anything handed to them.
“Having the high ranking that we do suggests that all of these synergies are firing together and allows a debtor to be more confident that the process will work for them,” Rock said. “The chances are dramatically better that you will be able to save your home and other assets.”
By the Numbers
- The Northern District of New York — which includes more than 30 counties in the Utica, Syracuse and Albany areas — saw 1,600 completed Chapter 13 bankruptcy plans out of 2,360 closed cases in 2013. That 67.8 percent completion rate is 5.6 percent higher than it was in 2012, and was good enough to rank the district ninth out of 94 federal judicial districts.
- Along with the Western District of New York, which finished fifth, the two upstate districts were well above the national rate of 45.2 percent, and only bested by the districts of Vermont, eastern Oklahoma, North Dakota and the Northern Marianna Islands. The Central District of California’s 12.5 percent completion rate was worst in the U.S. Source: Administrative Office of the U.S. Courts