Consumer Debtors Rush To Beat NewBankruptcy Law

Register now

WASHINGTON - (10/17/05) -- Thousands of debtors were lining thehalls of the U.S. Bankruptcy Courts across the country Friday in ahurry to file for Chapter 7, before Monday's effective date of thenew bankruptcy law making it more difficult to wipe out debts.Almost 103,000 Americans filed for bankruptcy in the week endedOct. 7, up from a previous record of 68,287, according to LundquistConsulting, a California consulting firm. And more than 100,000bankruptcy petitions were filed in just the first three days oflast week, when new records were expect to be set for consumerbankruptcies, as the new deadline approached. Thousands more wereexpected to file electronically over the weekend, as many courtsallowed debtors to file over the Internet. "The all think theywon't be able to file after next week," one credit union attorneytold The Credit Union Journal on Friday. The new law, heavilysupported by credit unions, will make it more difficult for debtorswith some financial means to file a Chapter 7 petition to erase allof their debts, relegating those debtors, instead, to a Chapter 13financial reorganization. The new law will also require filers tosubmit more paperwork, such as tax returns and paycheck stubs, andto get credit counseling at their own expense within six months offiling for bankruptcy.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER