Change in Law Spurs Bankruptcy Filings

Discussion in 'Trading' started by dividend, Sep 23, 2005.

  1. http://news.yahoo.com/s/ap/20050923/ap_on_bi_ge/bankruptcy_changes

    Debtors are responding. Counting down toward the Oct. 17 effective date for the biggest reform in U.S. bankruptcy law in a generation, personal bankruptcy filings have jumped this month to the highest on record. Filings averaged more than 9,000 per day, up roughly 50 percent from last year's average daily volume, during the first two weeks of September.


    Travis Plunkett, legislative director of the Consumer Federation of America, called the law "harmful and mean-spirited." While it will halt some abuse by high-fliers who shouldn't be filing for bankruptcy, he said, it also will trap people and businesses that got into financial trouble through little or no fault of their own and block people's realistic chances at starting over.

    And some economists say that taking away the traditional "fresh start" option from those middle-income people will be harmful to the U.S. economy, which has benefited greatly from entrepreneurial and other risk-taking.

    The number of personal bankruptcies leaped to an all-time high in the second quarter, when the legislation was passed, and the surge has since accelerated. About 1.24 million filings had been made nationwide in 2005 through Sept. 17, reflecting a 9.2 percent increase over last year and closing in on the record of 1.62 million filings in 2003, said Lundquist Consulting.

    Every weekday, scores of people arrive at a federal office in downtown Chicago where they sit quietly in an anteroom, waiting for the five- to 10-minute session with a trustee that will launch the Chapter 7 bankruptcy process and — they hope — wipe out their debts.

    "I'm seeing cases that wouldn't have been filed a year ago," he said. "Mostly poor people, but also somebody with a $4 million house in Kenilworth," a wealthy Chicago suburb.

    "For somebody who's desperately poor, that may be a barrier to them to file at all," said Peterson, who predicts the average cost will rise as much as $300 or more. "So more people may go to non-lawyers to file it," leaving them more vulnerable in the process, he said.

    All that's certain for now is that the rush to file is likely to continue until midnight of Oct. 16.

    "They're coming out of the woodwork," Kaplan said.
     
  2. Spurred corp also;
    DAL ,NWAC mentioned it:cool: