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What to Consider When Filing for Personal Bankruptcy
by: Roy Barker

President Bush signed into law The Bankruptcy Abuse and Consumer Protection Act. This bill made many changes to law, and makes it more difficult for the average person in financial trouble to have debts removed with bankruptcy. Recent social and economic changes indicate that those considering a bankruptcy should do so now, as the queue is getting longer.

It is be now be harder to file under Chapter 7 of the code, which allows the courts to wave consumer debt and give the debtor a new start. Filings posted will be tested and those who have a decent income it seems will have to file under a more strenuous Chapter 13, which demands repayment by installments and the assistance of a lawyer. Now looming, bankruptcy filings are not only higher than they were previously, but are also higher than expected. Across the country, filings are substantially higher than before, and some bankruptcy practitioners say that their business has increased dramatically.

To make it more confusing, another law requires credit card companies to establish a payment schedule that permits consumers to repay debts in amended installments. Most credit card providers have doubled their minimum payments. An average person with, say $12,000 in credit card debt, will have approximate monthly payment increases from between $150 to $450, an increase most people can ill afford.

This increase in bankruptcy filings has overwhelmed bankruptcy lawyers, who face a burden of being liable for false information filed by clients once the new law takes effect. Certainly an unwelcome change. This additional liability, together with the additional tasks, has prompted many lawyers to raise fees substantally.

What does this mean for those with bad debt? Now bankruptcy filings are more confusing, complicated and costly. The system is already overloaded with bankruptcy cases. If you suspect you're in the bankruptcy category, you should move on it now. Waiting even another day could be too late.


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