Projected Bankruptcy Filings Continue To Rise
The Bankruptcy Abuse Prevention and Consumer Protection Act has caused anxiety for both consumers and attorneys alike. Consumers are worried - and rightly so - that they no longer will be able to qualify under Chapter 7, and that if they file under Chapter 13 they'll be required to pay back a bulk of their debts. Attorneys are put off by the filing process, which has become both time-consuming and labor-intensive, ultimately driving up costs for the debtors.
Bankruptcy filings rose from 200,000 in 1978 to more than 1.6 million last year, according to a recent article in the New York Times. Because of the law changes that go into effect in October, that number is expected to rise in 2005, by some estimates reaching 1.8 million. Nationwide, the filings have increased 12 percent in April, May and June from last year's numbers.
Other reports, including recent ones from Ohio and Kentucky, Mirror the New York Times' findings. In Ohio, for example, bankruptcy filings are on pace to increase by 6.2 percent over 2004.
Consequently, many bankruptcy attorneys are finding themselves swamped with clients hoping to beat the deadline.
Only time will tell whether filings continue to rise after the new laws are in place, or if they'll drop off dramatically because consumers find them too daunting.
