| Bankruptcy Reform Act Failing
The most recent changes in Federal Bankruptcy Law, created by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 are failing to reach their intended objectives.
The Bankruptcy Reform Act pushed through Congress in part by credit card companies, was intended to force more debtors into Chapter 13 repayment plans, rather then Chapter 7 debt discharge and liquidation. What the law has created however, is a far more expensive administration of bankruptcy cases, debtor misunderstanding of the laws and little effect on who qualifies for a Chapter 7 discharge and who does not.
The Court filing fees for Chapter 7 Bankruptcy have risen to $299.00 from $209.00. This does not include, pre-bankruptcy credit counseling fees that average $50.00 or post-bankruptcy Debtor Education fees that average $30.00 to $50.00. Additionally, attorney fees have increased lockstep with the additional paperwork and due diligence requirements of the Reform Act.
Misunderstandings of the Reform Act are widespread. One of the most frequent asked questions I hear is, "Can I still file Bankruptcy?". The answer is almost always yes, yet there are an increasing number of debtors to broke to even file Bankruptcy due to the increasing costs and choice to simply ignore their financial problems for years in hope that it may someday simply go away.
According to the American Bankruptcy Institute one in every sixty households filed a consumer bankruptcy in 2005. The expansion of credit card use and liberal lending practices which helped fuel the unprecedented economic expansion of the 1990's and helped consumers pay for everything from luxury items to uninsured medical expenses are coming back to haunt credit card companies in this decade through the ever increasing number of Chapter 7 Bankruptcy debt discharges.
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