Consumers Race to File Bankruptcy Petitions

SteveR · 10-14-2005, 01:06 PM

The new bankruptcy law is bringing the LATM folks out in droves to file before the law changes on Monday. Yikes!

AP

"...Across the nation, about 100,000 petitions were filed in the first three days this week, according to Burlingame, Calif.-based Lundquist Consulting, which compiles bankruptcy statistics. The firm said 102,863 were filed last week, a record expected to fall.

The new law, the most sweeping reform of the U.S. Bankruptcy Code in decades, takes effect Monday, setting new limits on personal bankruptcy filing and requiring people to get professional credit counseling before they may file petitions. It will prohibit most filers with above-average income from filing Chapter 7 petitions that allow debts to wiped out.

Instead, people deemed by a "means test" to have at least $100 a month left over after paying certain debts and expenses will have to submit a five-year repayment plan under the more restrictive Chapter 13.

At the U.S. Bankruptcy Court here, clerk Brad Bolton said the number of filings set a record every day this week, with nearly 2,000 filed on Thursday alone.

"We've never seen anything like this," he said, standing in a corridor near the courthouse door. "Every day has just gotten worse than the day before.""

brewer12345 · 10-14-2005, 01:10 PM

I get the feeling we are getting half a year's woth of filings in the 6 or 8 weeks leading up to the change. Ain't gonna be pretty for anyone in trouble after Sunday.

**Martha** · 10-14-2005, 01:50 PM

I bugged out of town and out of the practive before the rush. Haven't filed bankruptcy for anyone in about a year. Most bankruptcy lawyers I know quit taking cases a while ago to get them all done before the law changed. Lot of the people coming in to file in the last few days are doing it without an attorney. The clerks are having a great time trying to process it all.

JPatrick · 10-14-2005, 01:57 PM

Does this new law have any impact on business/corporation filings??

brewer12345 · 10-14-2005, 02:00 PM

Quote:

Originally Posted by JPatrick

Does this new law have any impact on business/corporation filings??

Yes. Many, many things change to make it a lot less advantageous to file. That is why so many corporations filed recently. Martha, would you like to give us a summary of the changes to corporate BK?

**Martha** · 10-14-2005, 02:18 PM

Yeah, but not right now. I am sitting here on the road on a nice wi-fi connection and not in the right state of mind to think too much about bankruptcy.

Most of the changes to Chapter 11 rules involve trying to shorten up the process. A number of the changes will make it less likely for businesses to successfully reorganize. For example, a chapter 11 debtor will have a relatively short time to decide whether to accept or reject a lease. The shortened time period will make it very difficult for debtors, like Macy's or Kmart, to make a good decision as to whether a location is viable.

Most of the changes are boring stuff like this.

The true purpose of bankruptcy reform was to make it more difficult and expensive for individuals to file bankruptcy.

10-14-2005, 01:06 PM	#1
SteveR Moderator Emeritus Join Date: Jul 2005 Posts: 2,675	Consumers Race to File Bankruptcy Petitions The new bankruptcy law is bringing the LATM folks out in droves to file before the law changes on Monday. Yikes! AP "...Across the nation, about 100,000 petitions were filed in the first three days this week, according to Burlingame, Calif.-based Lundquist Consulting, which compiles bankruptcy statistics. The firm said 102,863 were filed last week, a record expected to fall. The new law, the most sweeping reform of the U.S. Bankruptcy Code in decades, takes effect Monday, setting new limits on personal bankruptcy filing and requiring people to get professional credit counseling before they may file petitions. It will prohibit most filers with above-average income from filing Chapter 7 petitions that allow debts to wiped out. Instead, people deemed by a "means test" to have at least $100 a month left over after paying certain debts and expenses will have to submit a five-year repayment plan under the more restrictive Chapter 13. At the U.S. Bankruptcy Court here, clerk Brad Bolton said the number of filings set a record every day this week, with nearly 2,000 filed on Thursday alone. "We've never seen anything like this," he said, standing in a corridor near the courthouse door. "Every day has just gotten worse than the day before."" __________________ Work? I don't have time to work....I'm retired.

10-14-2005, 01:10 PM	#2
brewer12345 Give me a museum and I'll fill it. (Picasso) Give me a forum ... Join Date: Mar 2003 Posts: 9,249	Re: Consumers Race to File Bankruptcy Petitions I get the feeling we are getting half a year's woth of filings in the 6 or 8 weeks leading up to the change. Ain't gonna be pretty for anyone in trouble after Sunday. __________________ “When you realize that you are one of the rare few who observe moral principles in their relationships with others, there is a temptation to sink into amorality, not out of conviction or pleasure but simply to avoid further pain, because there is no greater suffering than being an angel in hell, whereas a devil feels at home wherever he goes.” – Martin Page, How I Became Stupid

10-14-2005, 01:50 PM	#3
Martha Administrator Join Date: Feb 2004 Location: minnesota Posts: 9,861	Re: Consumers Race to File Bankruptcy Petitions I bugged out of town and out of the practive before the rush. Haven't filed bankruptcy for anyone in about a year. Most bankruptcy lawyers I know quit taking cases a while ago to get them all done before the law changed. Lot of the people coming in to file in the last few days are doing it without an attorney. The clerks are having a great time trying to process it all. __________________ . Do not rely on the information provided--my posts are not to be taken as legal advice. Needless to say you must consult with your legal representative. I am not responsible for errors. If I offended you with cya I apologize. If I did not, I tried.

10-14-2005, 01:57 PM	#4
JPatrick Thinks s/he gets paid by the post Join Date: Jun 2005 Posts: 1,503	Re: Consumers Race to File Bankruptcy Petitions Does this new law have any impact on business/corporation filings?? __________________ If you do what you've already done, you'll get what you've already got- - - -<

10-14-2005, 02:18 PM	#6
Martha Administrator Join Date: Feb 2004 Location: minnesota Posts: 9,861	Re: Consumers Race to File Bankruptcy Petitions Yeah, but not right now. I am sitting here on the road on a nice wi-fi connection and not in the right state of mind to think too much about bankruptcy. Most of the changes to Chapter 11 rules involve trying to shorten up the process. A number of the changes will make it less likely for businesses to successfully reorganize. For example, a chapter 11 debtor will have a relatively short time to decide whether to accept or reject a lease. The shortened time period will make it very difficult for debtors, like Macy's or Kmart, to make a good decision as to whether a location is viable. Most of the changes are boring stuff like this. The true purpose of bankruptcy reform was to make it more difficult and expensive for individuals to file bankruptcy. __________________ . Do not rely on the information provided--my posts are not to be taken as legal advice. Needless to say you must consult with your legal representative. I am not responsible for errors. If I offended you with cya I apologize. If I did not, I tried.

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