Consumer Bankruptcy Attorneys Say BAPCPA Has Increased Cost of Bankruptcy with No Benefits
As the first anniversary of the controversial 2005 bankruptcy reform provisions nears, the National Association of Consumer Bankruptcy Attorneys (NACBA) has conducted a survey of 700 consumer bankruptcy attorneys. The results are unsurprising: "the primary impact of the new law appears to be more paperwork hassles and higher expenses for already cash-strapped consumers."
More than 75% of the attorneys surveyed indicated that the time involved in preparing a bankruptcy petition has increased by 50% or more since the law change. More than a quarter of respondents said their preparation time had doubled. More than 90% of respondents perceived that the change in the law had primarily increased costs, with little or no substantive impact.
Henry Sommer, President of NACBA, points out that the means test, intended to screen out abuses, has instead demonstrated that the credit industry's ten-year lobby was misguided. "Virtually none of the people who file chapter 7 cases are able to pay more."
Additionally, the study showed:
--Fewer than 1/3 of bankruptcy attorneys report seeing an increase in forced Chapter 13 repayment plans
--More than 2/3 of consumer bankruptcy attorneys report a jump in consumer inquiries during the third quarter of 2006
--Fewer than 10% of cases handled by participating attorneys were linked to discretionary spending issues
The problems that pushed consumers to file for bankruptcy haven't gone away, and consumers are beginning to discover that bankruptcy is still a viable option for them. 57% of attorneys surveyed expect bankruptcy filings to return to pre-BAPCPA levels by the second anniversary of the new law, with more than 10% predicting that filings will reach normal levels by the end of 2006.
