What is the name of your state?
From the Chicago Tribune:
March bankruptcy filings surge after changes OKd
By Lorene Yue
Tribune staff reporter
Published May 10, 2005
The phones started ringing in mid-March after Congress approved a bankruptcy law overhaul, and the calls to consumer bankruptcy attorneys haven't stopped.
"No question about it," said Melvin Kaplan, a consumer bankruptcy attorney in Chicago. "Inquiries have doubled, and appointments have been made. For me personally, filings are up 25 percent."
Bankruptcy filings in March jumped nearly 60 percent from February, according to Cardweb.com, a Frederick, Md.-based firm that tracks the credit and debit card industries.
Compared with last March, filings rose 8.5 percent, which Cardweb.com said was a change from January and February, when filings fell compared with year-earlier periods.
"It's going to be a madhouse this summer," said Anand Jerome Menezes, a bankruptcy attorney for Macey & Chern in Chicago, which has hired additional staff to brace for the onslaught.
That's not unexpected, say industry insiders. The law, which takes effect Oct. 17, will make it more difficult to have most debts erased in bankruptcy court.
The changes have dredged up anxiety among financially burdened consumers who may choose to bite the bullet now.
"It's causing people on the brink of bankruptcy to consider it sooner rather than later," said Travis Plunkett, spokesman for the Consumer Federation of America.
A number of law firms are seizing the opportunity to drum up more business from anxious consumers by increasing advertising that warns of the coming changes. Debtoraid.com, an online preparer of bankruptcy filings, warns visitors to its Web site that a "new bankruptcy bill has passed both the House and Senate. Act today before it becomes the law."
Publisher banks on demand
Nolo, which publishes do-it-yourself legal guides, is banking on panicked consumers to snatch up copies of the 12th edition of "How to File for Chapter 7 Bankruptcy," which hits bookstores this month.
"We know it will sell out," said a Nolo representative. "We already have a back order of 2,000 copies, which is big to us."
That has some nervous that debt-laden individuals will jump into bankruptcy before considering all their options.
"You need to be very careful about making this decision," said Claire Parins, legal content editor for Socrates Media in Chicago, which produces do-it-yourself packages for bankruptcy and other issues. "You should also consider credit counseling and debt consolidation."
Consumer advocates remind those considering bankruptcy that it can tarnish their credit record for a decade.
"Never ever make a hasty decision about any kind of debt assistance, whether bankruptcy or credit counseling," Plunkett said. "What kind of a person is in a hurry to destroy their credit for the next 10 years?"
Still, that stigma hasn't kept some consumers who considered bankruptcy in the past from coming out of the woodwork. Instead, they see the overhaul as an alarm.
"This woke them up," said Xiaoming Wu, a bankruptcy attorney at Ledford & Wu in Chicago. "Some people disappeared for months and then suddenly re-emerged."
What's driving consumers to law offices?
Much of the buzz centers on a means test used to determine if consumers can file for Chapter 7 bankruptcy or Chapter 13. Overhaul supporters claim that reckless spending has too many debt-laden consumers seeking shelter in Chapter 7, which absolves them of nearly all financial obligations. They argue that they should be filing under Chapter 13, which establishes a repayment plan.
"Up until now, there has been a presumption of relief, and now that is shifting to a presumption of abuse and you have to disprove that," said Albin Renauer, author of "How to File for Chapter 7 Bankruptcy."
Afraid of a shutout
So consumers afraid of being shut out of Chapter 7 are trying to get protection under that status before the new law takes effect.
"There are some Chapter 7 cases I see now that definitely would not be able to do Chapter 7 after the new law takes effect because of the means test," Wu said.
Critics contend that abusers represent a fraction of all bankruptcy filers and that the new law is going to create hardship for more consumers.
The new law requires all filers to seek financial counseling before filing for bankruptcy, a requirement critics said could expose consumers to unscrupulous companies more interested in making money through consultation fees than cleaning up a client's credit record.
And those in Chapter 13 bankruptcy will be subjected to expense guidelines for food and housing that consumer advocates have called outdated.
"It's not panic," Kaplan said. "It's well-founded. There's enough information out now that people are becoming aware that there is going to be a new code and they would rather grab the bull by the horns."
From the Chicago Tribune:
March bankruptcy filings surge after changes OKd
By Lorene Yue
Tribune staff reporter
Published May 10, 2005
The phones started ringing in mid-March after Congress approved a bankruptcy law overhaul, and the calls to consumer bankruptcy attorneys haven't stopped.
"No question about it," said Melvin Kaplan, a consumer bankruptcy attorney in Chicago. "Inquiries have doubled, and appointments have been made. For me personally, filings are up 25 percent."
Bankruptcy filings in March jumped nearly 60 percent from February, according to Cardweb.com, a Frederick, Md.-based firm that tracks the credit and debit card industries.
Compared with last March, filings rose 8.5 percent, which Cardweb.com said was a change from January and February, when filings fell compared with year-earlier periods.
"It's going to be a madhouse this summer," said Anand Jerome Menezes, a bankruptcy attorney for Macey & Chern in Chicago, which has hired additional staff to brace for the onslaught.
That's not unexpected, say industry insiders. The law, which takes effect Oct. 17, will make it more difficult to have most debts erased in bankruptcy court.
The changes have dredged up anxiety among financially burdened consumers who may choose to bite the bullet now.
"It's causing people on the brink of bankruptcy to consider it sooner rather than later," said Travis Plunkett, spokesman for the Consumer Federation of America.
A number of law firms are seizing the opportunity to drum up more business from anxious consumers by increasing advertising that warns of the coming changes. Debtoraid.com, an online preparer of bankruptcy filings, warns visitors to its Web site that a "new bankruptcy bill has passed both the House and Senate. Act today before it becomes the law."
Publisher banks on demand
Nolo, which publishes do-it-yourself legal guides, is banking on panicked consumers to snatch up copies of the 12th edition of "How to File for Chapter 7 Bankruptcy," which hits bookstores this month.
"We know it will sell out," said a Nolo representative. "We already have a back order of 2,000 copies, which is big to us."
That has some nervous that debt-laden individuals will jump into bankruptcy before considering all their options.
"You need to be very careful about making this decision," said Claire Parins, legal content editor for Socrates Media in Chicago, which produces do-it-yourself packages for bankruptcy and other issues. "You should also consider credit counseling and debt consolidation."
Consumer advocates remind those considering bankruptcy that it can tarnish their credit record for a decade.
"Never ever make a hasty decision about any kind of debt assistance, whether bankruptcy or credit counseling," Plunkett said. "What kind of a person is in a hurry to destroy their credit for the next 10 years?"
Still, that stigma hasn't kept some consumers who considered bankruptcy in the past from coming out of the woodwork. Instead, they see the overhaul as an alarm.
"This woke them up," said Xiaoming Wu, a bankruptcy attorney at Ledford & Wu in Chicago. "Some people disappeared for months and then suddenly re-emerged."
What's driving consumers to law offices?
Much of the buzz centers on a means test used to determine if consumers can file for Chapter 7 bankruptcy or Chapter 13. Overhaul supporters claim that reckless spending has too many debt-laden consumers seeking shelter in Chapter 7, which absolves them of nearly all financial obligations. They argue that they should be filing under Chapter 13, which establishes a repayment plan.
"Up until now, there has been a presumption of relief, and now that is shifting to a presumption of abuse and you have to disprove that," said Albin Renauer, author of "How to File for Chapter 7 Bankruptcy."
Afraid of a shutout
So consumers afraid of being shut out of Chapter 7 are trying to get protection under that status before the new law takes effect.
"There are some Chapter 7 cases I see now that definitely would not be able to do Chapter 7 after the new law takes effect because of the means test," Wu said.
Critics contend that abusers represent a fraction of all bankruptcy filers and that the new law is going to create hardship for more consumers.
The new law requires all filers to seek financial counseling before filing for bankruptcy, a requirement critics said could expose consumers to unscrupulous companies more interested in making money through consultation fees than cleaning up a client's credit record.
And those in Chapter 13 bankruptcy will be subjected to expense guidelines for food and housing that consumer advocates have called outdated.
"It's not panic," Kaplan said. "It's well-founded. There's enough information out now that people are becoming aware that there is going to be a new code and they would rather grab the bull by the horns."