Why Did the Number of Bankruptcy Filings Greatly Decrease Immediately After BAPCPA and Why Are They Rapidly Increasing Now?
By Peter Orville, Attorney at Law on Oct 17, 2007 in Bankruptcy Myths, Bankruptcy Practice and Procedure, Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, General Bankruptcy Information, New York, State Specific Bankruptcy Issues
In my previous blog I showed that BAPCPA had an immediate effect in dramatically reducing the number of bankruptcy filings throughout the United States. In my District, filings were down 67 percent in the first year.
One reason for the dramatic decrease was the huge number of people who filed bankruptcy in the days and weeks prior to October 17, 2005. In the Northern District of New York a total of 10,224 Chapter 7’s and 13’s were filed in the month and a half prior to BAPCPA taking effect. That should be compared with only 372 cases filed in the two months after BAPCPA.
Most of the pre-BAPCPA filers shared the widely held belief that BAPCPA would make bankruptcy much more expensive and would make it difficult if not impossible to file.
They were right about it becoming more expensive. Between new costs for getting credit counseling and debtor education certificates, a big increase in the filing fee for chapter 7, and increased attorney fees due to the new requirements of BAPCPA, the overall costs of filing bankruptcy nearly doubled.
But they were wrong about it becoming more difficult or impossible to file bankruptcy. Sure, there is quite a bit more paperwork. In reality, though, the past two years have proven that not only is bankruptcy still a realistic answer to many people’s debt problems, but that in many areas BAPCPA gives people opportunities they didn’t have under the old law.
In the Northern District of New York, there was a 42 percent increase between the first eight months of 2006 and the first 8 months of 2007. As people learn that bankruptcy is still available, and as the number of foreclosures increases and the credit crisis continues to rage, the number of people filing bankruptcy will further increase, probably back to pre-BAPCPA levels.
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