Richland bankruptcy attorney Leslie K. Smith hopes the drop in bankruptcy filings means the Tri-City economy is improving.

But despite the 14 percent decline in bankruptcy filings, Smith said she remains concerned because most cases she sees have their roots in unpaid medical bills.

One client comes to mind because he had the same surgery her son Ryan did -- an appendectomy. Smith said her son, who has insurance through his retired military father, paid a $20 copay for the surgery.

But for a client who had the same surgery, his bill was $28,000 because he had no insurance. He declared bankruptcy with Smith's help, offered pro bono.

Benton County saw a steeper decline, with a drop of about 17 percent to a total of 624 filings last year.

In 2010, new bankruptcy cases fell by 1 percent compared with 2009, according to the Spokane office of the U.S. Bankruptcy Court.

Franklin County saw a larger decline in 2010, when filings dropped by almost 14 percent; and just a 5 percent drop last year, to 271 cases.

Seeing bankruptcies drop reflects the overall strength and diversity of the Tri-City economy, said Don Paddock, a Columbia Basin College business department instructor.

The community has diversified, with agricultural production and processing, and the medical field helping to make the Tri-Cities less dependent on Hanford jobs, he said.

And the area has become a retirement community, with the income of retirees exceeding Hanford payroll, Paddock said.

Nationwide, bankruptcy filings fell by about 12 percent to almost 1.4 million in the past year, according to the National Bankruptcy Research Center's December bankruptcy filings report.

Smith, who has represented clients declaring bankruptcy since 1992, is hopeful that shows the economy is beginning to recover.

"Normally if people aren't able to get back to work, there are going to be more filings, not fewer," she said.

The extension of unemployment benefits may have kept some people from filing bankruptcy. There also has been an aggressive campaign by debt reorganization companies on TV, Smith said.

Those businesses can negotiate with creditors to come up with payment plans, Smith said. But people should check the business out first, such as checking for complaints with the state Attorney General's Office and the Better Business Bureau.

In the Tri-Cities, the most common kind of bankruptcy, Chapter 7, dropped by almost 15 percent in 2011 to 746 cases. Unsecured debts can be discharged, but debts such as student loans and child support, still have to be repaid in Chapter 7 bankruptcies, Smith said.

If someone is having wages garnished by a creditor, filing for bankruptcy can usually stop that, Smith said.

The ability to use Chapter 7 is limited by income, Smith said. Washington has the fifth-highest income limit in the nation, at $51,671 for an individual. For a family of four, the income limit is $80,404.

Chapter 13 bankruptcies, where someone repays a portion of their creditors, dropped by nearly 8 percent in 2011 to 146, according to the court.

Filing Chapter 13 can keep a home from being foreclosed or a car from being repossessed, Smith said.

Foreclosures were the lowest they have been in eight years, with 355 foreclosures in 2011 compared with 755 in 2010, according to a report by Benton-Franklin Title Co.

Fewer people have gone to Consumer Credit Counseling Service of the Tri-Cities for the required pre-bankrupcy one-on-one counseling session, said Laurie Tufford, the nonprofit's regional director of partnerships.

On Wednesday, the center rolled out the Restart program, where clients can receive bankruptcy counseling online using a chat session with a counselor, Tufford said. It adds convenience because it can be done from their own home and outside of normal business hours.

A change in circumstances, such as losing a job or medical bills, are the most common reasons people consider bankruptcy, Tufford said.

"Unfortunately, a lot of people are living paycheck to paycheck," Tufford said.

One crisis can be enough to put someone behind in bills and unable to catch up, she said.

Health insurance is getting so expensive and copays and deductibles also are getting higher, Smith said. Some people can't afford the premiums even if they are employed and their employer offers health care plans.

For others who have insurance, sometimes it doesn't cover enough of the cost for medical care, Smith said.

"It's really a mad cycle," she said. "Something needs to be done."

People need to get an accurate idea of their expenses and should talk to creditors rather than trying to avoid them, Tufford said.

With so many people struggling, credit companies are willing to work with people, she said.

"When in doubt, ask for help," Tufford said.