16 Oct Bankruptcy In Florida: Chapter 7 Two Years After The Reform
While pondering the changes in the Bankruptcy code over the last two years, it seem kind of funny how all the naysayers were contemplating the demise of bankruptcy. However, bankruptcy for individuals has survived the 2005 Bankruptcy Reform.
Individuals can still file Chapter 7 bankruptcy, receive a fresh start and get on with their lives. The overall scheme employed in Southwest Florida has improved in my opinion, but the question remains: Did these changes result in more money going to the Creditors? I don’t think that it did.
The improvements in the Chapter 7 system did not come without a cost. The demand for documents, while depressing to debtors, is, in my opinion necessary. In our office, we were requesting documentation from the debtors for years. So, it wasn’t that hard for us to adapt to the changes. The problem was the increased cost to the debtors.
Congress intended to raise the costs of filing a Chapter 7 bankruptcy, and they succeeded in their mission. Congress did this in several ways. The filing fee increased. The cost of credit counseling was added. The attorney’s fees increased due to the increased demands on attorney’s time.
In Southwest Florida, we have two Chapter 7 Trustees. Each Trustee requests additional documentation prior to the Chapter 7 Meeting of Creditors, thereby creating additional document demands on the Debtors and their attorney’s staff. The Chapter 7 Trustees in Southwest Florida are efficient, know how to do their jobs and liquidate all the debtor’s non-exempt assests in an expeditious manner.
I definitely charge more for a Chapter 7 bankruptcy now than I ever did in the past. However, my office is not more profitable because of the reform. The increase in costs is eaten up by the increases in overhead to deal with the reforms. Indirectly, this hurts the consumer.
Another interesting thing happened in July of 2007, which further frustrated the creditors. Governor Charlie Crist signed legislation that increased the personal property exemption for individuals not claiming a homestead exemption. With this single stroke of the pen, Governor Crist gave hope to many individuals who may had to file Chapter 13 reorganization. I would honestly like to know how much money Governor Crist saved the people of Florida by signing that legislation into law. I would bet that it is in the millions already and will be in the billions in the next few years.
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