The Bankruptcy Lawyers Blog

With your help, we raised $3,000 for the Philadelphia County Consumer Bankruptcy Assistance Project.  Thanks to everyone who attended and donated to the cause. 

Photographs of the fundraising event and the trade show itself are available on Start Fresh Today at 2007 NACBA Conference Photos.

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Although October 17, 2005 is the day that lives on in infamy in all of our minds, it was two years ago this month that BAPCPA was actually enacted.   The Commercial Law League of America's Bankruptcy Section conducted a survey within the bankruptcy industry--business bankruptcy practitioners, consumer bankruptcy practioners, judges, trustees, creditors representatives, and non-attorney professionals.

The data gathered, though unsurprising, shows some unfortunate trends:

• Most consumer practitioners surveyed increased their fees as a result of BAPCPA
• 1/3 of respondents shifted their client mixes as a result of BAPCPA--this, too, is heavily weighted toward consumer bankruptcy attorneys
• Some firms eliminated consumer debtor representation altogether, and some cut out all debtor representation
• 1/3 of respondents had eliminated pro bono representation as a result of BAPCPA
• More than 12% said pro bono representation had been reduced as a result of BAPCPA
• 17% of respondents (some debtor representatives and some representing creditors) said they would no longer handle reaffirmation agreements because of BAPCPA

Asked which consumer provision they would repeal if they could choose only one, 55% of respondents opted to knock out the means test.  Pre-filing credit counseling came in second, at about 20%.  Although 36% of respondents said reaffirmation agreements worked better before the amendments and 17% had opted out of participating in the reaffirmation process altogether, only 8% of respondents chose the reaffirmation provisions as their first choice for repeal.

The full article by Catherine Vance, with additional survey results, is available at the Bankruptcy Litigation Blog.

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Visit us at the NACBA conference in Philadelphia this weekend to find out how Start Fresh Today's one-stop-shop can help save bankruptcy practitioners time and money, or just to enjoy the company of your colleagues and contribute to a good cause!

Attend a Start Fresh Today demo session at 7:00 or 8:00 p.m. at the Marriott and get five free debtor education courses to use with your clients any time you want. 

Then, join us on Saturday evening for a party to benefit the Philadelphia County Consumer Bankruptcy Assistance Project.  Cocktails and traditional "Philly" food will be served from 8:30 to 11:30 at McGillin's Olde Ale House, 1310 Drury Street...just a short walk from the Marriott.

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Yesterday, the United States District Court for the District of Minnesota entered its final order in the Milavetz case, granting the plaintiff's motion for summary judgment and declaring that:

1.  Sections 526 (a) (4), 528 (a) (4) and 528 (b) (2) are unconstitutional, "as applied to attorneys in the District of Minnesota".

2.  Attorneys in the District of Minnesota are excluded from the term "debt relief agency" as defined in 11 U.S.C. section 101 (12A) and, as such, are not subject to any of the duties relating to BAPCPA defined debt relief agencies. 

The Minnesota law firm of Milavetz, Gallop & Milavetz, P.A., along with two unnamed prospective clients, was among the first to file Constitutional challenges to BACPA, commencing this case in November of 2005, just weeks after the new law took effect.  In December of 2006, the Court made extensive findings declaring various provisions of BAPCPA unConstitutional and unenforceable as applied to attorneys.  Nonetheless, the United States opposed plaintiff's motion for summary judgment at a hearing in February.

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At long last, the Administrative Office of the Courts yesterday released the fourth quarter and annual 2006 bankruptcy filing statistics; the headline on the Courts' press release reads, "Bankruptcy Filings Plunge in Calendar Year 2006".  Of course, the numbers and what they might mean are old news to most of us:  AACER information has been available for some time, and even related in an Associated Press story that gave us a solid indication of first quarter 2007 stats before the official sources gave us a peek at the end of 2006.

More importantly, though, the attempted apples-to-apples comparison between 2005 and 2006 is unrealistic and perhaps disingenuous.  Yes, there were more than 2 million non-business bankruptcy filings in 2005, and there were fewer than 600,000 in 2006.  But the reasons for that dramatic shift have been thoroughly studied, and the one thing most experts agree on is that they don't mean that the new law  "worked" and consumer bankruptcy filings have radically declined, never to rise again.

University of Illinois law professor Charles Tabb offered a detailed analysis in the ABI Journal this winter, and predicted filings rising to pre-BAPCPA levels, or close to them.  Henry Sommer, President of the National Association of Consumer Bankruptcy Attorneys (NACBA) has repeatedly pointed out both that the rush to file before the law changed in the fall of 2005 absorbed a large number of people who would otherwise have filed in 2006 (and unnaturally raised 2005 filings) and that many people are under the misapprehension that they are no longer able to file for Chapter 7 bankruptcy.

Quarterly filings, as always, tell a different story. 

Q1, 2006:  116,771
Q2, 2006:  155,833
Q3, 2006:  171,146
Q4, 2006:  177,599
Q1, 2007:  186,788 (from AACER data)

While proponents of BAPCPA may choose to compare the skewed data from the transitional years side by side as if there were no anomalies, the numbers themselves, broken down in just about any way that makes sense, tell us that there was a dramatic rush to file before the law changed, a dramatic drop-off in filings right after the law changed, and they've been climbing ever since.  In fact, a straight like-time to like-time comparison shows that first quarter 2007 filings are 59.9% higher than first quarter 2006 filings.

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