Will Bankruptcy Survive?
The following came to me by e-mail yesterday - I'm posting the response for all of you to read here:
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Dear Kevin:
I am a bankruptcy attorney in NJ. Do you think that bankruptcy will survive. The new laws seem to be a killer.
-Ted
Ted,
thanks for your question. Bankruptcy may be a bit more tedious of a process, but it has not gone away. Debtors and their attorneys will have to jump through a few more hoops, but just because the banking industry bought a piece of legislation making the bankruptcy process more of a pain in the legal butt, does not mean that ordinary Americans don't need bankruptcy. For the next three months, you may see a significant dip in filings, but then things will normalize. With over 500,000 filings in the weeks before the law change, the huge rush in the months before that and attorneys' immediate reluctance to file cases until they are abundantly familiar with the law, it's understandable why we have such a dramatic fall off in the last few weeks. This trend will likely continue through the end of January or start of February when debtors start receiving their first credit card statements from the holidays with 4% minimum payment required.
We all properly conveyed to the general public that bankruptcy would be more difficult after the law change....but maybe we did too good of a job. The banks wanted the public to believe that bankruptcy was going away so fewer folks would consider bankruptcy after October 17th. Bankruptcy lawyers created a panic to drive business before the law change, and to make sure folks got in under the "wire". Now that the law change has come and gone, we all need to do our part to convey to consumers that their rights are alive and well under the new bankruptcy law. Yes, we have a few more hoops through which we must jump, but the bankruptcy system is still there for those in need.
