President Bush in April
signed into law The Bankruptcy Abuse and Consumer Protection Act. This
bill promises many changes to law, and will make it more difficult for the
average person in financial trouble to have debts removed with bankruptcy.
Recent social and economic changes indicate that those considering a
bankruptcy should do so now, as the queue is getting longer.
It will be now be harder to file under Chapter 7 of the code, which allows
the courts to wave consumer debt and give the debtor a new start. Filings
posted will be tested and those who have a decent income it seems will
have to file under a more strenuous Chapter 13, which demands repayment by
installments and the assistance of a lawyer. Now looming, bankruptcy
filings are not only higher than they were previously, but are also higher
than expected. Acros the country, filings are substantially higher than
last year, and some bankruptcy practitioners say that their business has
increased dramatically.
To make it more confusing is another law, that requires credit card
companies to establish a payment schedule that permits consumers to repay
debts in amended installments. Since early year, most credit card
providers have doubled their minimum payments. An average person with say
$12,000 in credit card debt, will have approximate monthly payment
increases from between $150 to $450, an increase most people can ill
afford.
This increase in bankruptcy filings has overwhelmed bankruptcy lawyers,
who face a burden of being liable for false information filed by clients
once the new law takes effect. Certainly an unwelcome change. This
additional liability, together with the additional tasks, has prompted
many lawyers to raise fees subsstantally over the same time as last year.
What does this mean for bad debt? From here on, bankruptcy filings will be
more confusing, complicated and costly. The system is already overloaded
with bankruptcy cases. If you suspect you're in the bankruptcy category,
you should move on it now. Waiting even another day could be too late.