The Costs of Bankruptcy
A large part of the new bankruptcy act is the requirement that debtors must now be investigated by their bankruptcy attorney. The attorney must complete a "reasonable investigation" of the debtor's financial affairs and assets before they can file. Recently, the Congressional Budget Office estimated that the cost of performing these investigations just for the year 2007 will be between $240 million and $800 million dollars, and would remain in that range for years to come.
Adding $800 million in costs to bankruptcy attorneys each year will serve to do little but increase the price of filing for bankruptcy in this country. Despite the obvious financial troubles of those looking to file, the new bankruptcy code has continued to demand more of the one thing these debtors do not have: cash. That $800 million dollars, even if it is spread across thousands of bankruptcy attorneys filing hundreds of cases a year, could easily still add up to a significant cost per case, a cost which will be passed directly to consumers trying to file for bankruptcy.
