The Evansville Courier Press has an article on the new bankruptcy law scheduled to go into effect on October 17, 2005. The new law will make it tougher to file bankruptcy generally, and Chapter 7 specifically. The article mentions the following specifically:
Means Test: Clients seeking eligibility for Chapter 7 bankruptcy must have their income compared to their state’s median income. If their income is above a certain level, people are not eligible for Chapter 7, which relieves filers from paying some debts. Mandatory credit counseling: Those seeking to file must undergo credit counseling before filing. Before a case can be discharged under Chapter 13, debtors must also undergo a course in financial management. Additional documentation: In addition to a list of creditors, a schedule of liabilities and a list of income and expenses, debtors must file a certificate of credit counseling, evidence of payment from employers, recent tax returns and other documents. Attorney verification: Attorneys must verify that all claims on a bankruptcy petition are “well grounded in fact.” Some say this puts additional burdens on lawyers.
The article also mentions a local attorney who stopped taking new bankruptcy cases for filing before the deadline. Coincidentally, I heard of a bankruptcy attorney in my area who quoted a debtor a figure of $2,000 to take a bankruptcy case. Sounds like bankruptcy attorneys will be working on and filing cases at full throttle from now until the 17th of October. The Lafayette Journal Courier has a listing of the area bankruptcies filed every week. Two Sundays ago, the paper had about 100 people named. Last Sunday there were about 125. Also coincidentally, my Dad, a bankruptcy attorney in Colorado suggested I cross over to “the right side” of the creditor/debtor equation and move to western Colorado which he suggests is a target-rich environment.
Anyway, I still don’t think the bill will actually do any good as far as getting creditors much extra money, and I think it will cause a whole lot of extra hassle and make a bunch of judgment proof debtors grind it out in poverty without getting their fresh start. The credit counseling services should do much better business though.
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