Budget Cutbacks Could Hurt System

20 Jun Budget Cutbacks Could Hurt System

The Associated Press is reporting bankruptcy clerks around the country fear the coming court budget for 2008 will force them to layoff experienced personnel just when they may need them most.

It appears that the Office of the U.S. Courts — the powerful administrative body that, in part, controls federal court budgets — currently uses a formula based on case-filing volume that could shrink bankruptcy court budgets starting in October. With the almost 50% reduction in cases being filed in bankruptcy, such a rudimentary approach will force layoffs.

Unfortunately the court clerk’s office is actually facing higher workloads per case under the new law than the pre-2005 Code. As one court noted in the article, an average of 14 docket entries under old law is now an average of 21 docket entries. So more work is required to process a lower (but increasing) volume of cases.

While automation has allowed the bankruptcy courts to operate more efficiently — in part also by passing many of the clerical tasks to the private bar — BAPCPA added many tasks which automation will not solve.

Although it appears the Office of U.S. Courts will try to adjust the formula used to determine budgeting, apparently that review may not be complete until after the October budget is finalized. This will likely result in clerks losing some of their experienced support staff just as volume continues to pick up in bankruptcy courts across the country.

For private attorneys, it is an uncomfortable reminder of the effects many of us felt from BAPCPA earlier. In 2005, with the rush of last minute filings under the old law, many of us were swamped with the demand, and had to add staff to cope. And still many clients were forced to go into court without a lawyer. And immediately after that almost no one wanted to file a case under the new law, causing many layoffs and not a few attorney bankruptcies in the long run as well.

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I have been a bankruptcy attorney since 1989. Our firm represents consumers filing bankruptcy almost exclusively, although I have represented bankruptcy trustees as well as creditors. For 2017-2019 I served on the American Bankruptcy Institute's Commission on Consumer Bankruptcy. Our Report recommended numerous changes to improve bankruptcy law to make it serve everyone in the process more effectively. If you live in Eastern Missouri, visit our website, send an e-mail or give us a call (314) 781-3400. Our website: STLBankruptcy.com
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