Bankruptcy Reform Not Working
By Richard K Gustafson, II
A report released by the National Association of Consumer Bankruptcy Attorneys says that the new reform legislation has failed to stop abuses and instead has thrown up obstacles to people with legitimate reasons to file for bankruptcy.
The report was based on analysis of 61,335 people who have gone to credit counseling agencies. Basically, the report showed that 97% were unable to repay any debts and 79% had gotten into financial trouble because of job loss, huge medical expenses or the death of a spouse. The report showed that the new laws were not making any measurable difference in preventing abuse, as the proponents of the legislation were hoping. Instead, the new laws have placed hurdles in the path of those who have unforeseeable financial problems.
The new credit counseling requirement was cited as an example of additional costs and time burdens placed on people who truly need bankruptcy relief and were not the intended targets of the new legislation, according to proponents. Proponents of the legislation supported it because they believed that the bankruptcy process was being abused by gamblers, compulsive shoppers, and multimillionaires who take advantage of liberal state laws that allow people to protect large residential estates.
Opponents of the legislation argued that the new laws do not address the concerns the proponents wanted to address. Instead, the new legislation simply makes it harder for low-income working people, single mothers, minorities, and the elderly to get needed relief.
This study supports those who opposed the legislation.
It seems that now, more than ever, people who need bankruptcy relief need to get knowledgeable counsel to help them negotiate the burdensome new laws and make sure their case gets done right. You should also know that despite the negative aspects of the new bankruptcy reform law, those who need relief can still file for bankruptcy. It might be harder to do now than before October 17, 2005, but it’s still not as hard as living in financial distress.
