The end of the year tends to be a slow time for bankruptcies, but as Christmas approached last month, Saratoga Springs attorney Ron Kim filed 10 new cases.
"A lot of that was to forestall foreclosures and things that had to be done," he said.
According to Kim, his bankruptcy case load increased 15 percent last year, which was consistent with the rest of the region.
Bankruptcies have been on the rise since 2006 due to the higher rate of job loss and foreclosure, and experts say they don't expect that to change any time soon.
Filings out of the Albany office of the U.S. Bankruptcy Court - which covers a 10-county area that includes Saratoga, Warren, Washington and Essex counties - increased 16 percent from 2008 to 2009. As compared to 2007's numbers, annual bankruptcy filings have jumped 41 percent.
Last year, the biggest increase was concentrated under Chapter 7, which clears an individual of some, but not all, debt.
The "fresh start" that Chapter 7 provides is limited to individuals who fail a means test - anyone who has at least $100 leftover after paying certain bills has to work out a five-year debt repayment plan under Chapter 13.
Filings for Chapter 13, which is the only route to save a home in foreclosure, declined from 2008 to 2009.
Bankruptcy attorney Paula Barbaruolo - whose Latham law firm handles cases in Saratoga, Warren and Washington counties - said her case load increased 20 to 30 percent in 2009 due in large part to more Chapter 7 cases.
"Clients are qualifying for Chapter 7 more than in the past," she said, noting that furloughs, reduction in hours or wages, and job loss have cut into their income.
In addition to more clients, attorneys say the type of people seeking their help has changed. Glens Falls bankruptcy attorney Christopher Nenninger said his client base now includes more people who are middle or upper-middle class and were successful.
"People in their 50s with businesses have been coming in, people with houses and with more to lose," Nenninger said. "They just can't do it anymore."
Foreclosure and job loss are two of the biggest reasons for filings in the last year, attorneys say; other reasons include changes to credit card interest rates and divorce.
Given the record-high foreclosure rate across the country, there has been a push to help struggling homeowners renegotiate their loans as an alternative to bank repossessions and bankruptcy.
The Obama administration implemented a program encouraging banks to refinance loans owned or guaranteed by Fannie Mae or Freddie Mac into more affordable monthly payments. So far, the results have been lackluster, with many people unable to keep up with the modified payments, and a small percentage of homeowners achieving a permanent change to their mortgages.
"I don't mean to say they are going great - they are not," Barbaruolo said of loan modifications, "but we are seeing more of them."
She said clients who are successful in negotiating new terms to their mortgages usually enter into a three-month trial period to test their ability to pay before the modification is made permanent. Barbaruolo is working with three homeowners whose modifications should become final this month, at which point she can help them figure out whether to file for bankruptcy for their other debt.
For his part, Kim said loan modifications just aren't working because banks aren't participating.
"They are just swamped with loan modification requests," Kim said. "You literally can't get their attention."
As for what lies ahead, experts say the outlook for 2010 is no better than it was last year. Bankruptcies tend to be a lagging indicator, hinging on the health of a job market that has not yet shown any signs of real recovery.
"I see a lot of filings into the future, even as the economy gets better, because clients are dealing with the catch-up," Barbaruolo said. "Twenty percent of my clients are current, but they know with the next payment they are not going to be."