Reform Results: Desperate For Relief !!

29 Dec Reform Results: Desperate For Relief !!

The results of the 2005 BAPCPA reforms are in, and folks are more desperate for relief than ever before.

Consider that a 2001 filer had debts equaling about 30 months of income, but in 2007 the debts equaled 39 months of income, a 30% increase. Or that in 2004, the last year unaffected by 2005’s BAPCPA, had 1.6 million filings but 2007 had only about 800,000. What happened to the other 800,000 families? Or, finally, that 32% of the 2001 filers had struggled with debts for more than two years, but 43% of the 2007 filers had struggled for more than two years, a 34% increase.

The authors of this important study, cited below, ruled out other theories and were left with a “sweat box” concept for the missing 800,000 filers. Fees and costs significantly rose because of the BAPCPA reform burdens, forcing desperate Americans to “sweat out” a delay in filing for bankruptcy protections. This delay is compounded by lies from collectors, falsely telling a struggling debtor that (1) it was illegal to file bankruptcy, (2) one might go to jail for filing, (3) the IRS would audit a filer, or (4) one might lose their job by filing. (Too bad these calls aren’t recorded for later law suits.)

This information comes from “Did Bankruptcy Reform Fail: An Empirical Study of Consumer Debtors”, published in the Summer 2008 issue of The Bankruptcy Law Journal and by Harvard University. Its authors are among the best-known experts of consumer bankruptcy. Thanks to BLN Member Peter Orville for his earlier comments on this significant report.

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L. Jed Berliner practices exclusively in consumer bankruptcy, foreclosure defense, and related consumer protection litigation such as credit card defenses and suing debt collectors. He established his Springfield, MA practice in 1988. Attorney Berliner is a regular and active contributor to the Bankruptcy Law Network, the Bankruptcy Roundtable, and the National Association of Consumer Bankruptcy Attorneys, three specialized consumer bankruptcy forums on the Internet, and is an informal mentor to regional practitioners. He is recognized by his peers as an expert in consumer bankruptcy issues. He thoroughly enjoys being rated "excellent" in his client surveys.

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