Restarting via bankruptcy will be getting a lot tougher

[laz]

Restarting via bankruptcy will be getting a lot tougher

New law will make it extremely difficult to erase a pile of debt and just walk away.

By Frank Norton / Raleigh News & Observer

Bankruptcy professionals predict a busy summer as filers scramble in anticipation of new federal rules that will make it harder and more expensive to erase debt and start anew.

"We're already seeing an uptick in the number of filings," said Sam Gerdano of the American Bankruptcy Institute, an Alexandria, Va.-based group that includes lawyers, bankers, judges and other bankruptcy professionals.

Nationally, the number of bankruptcy petitions filed in the first three months of the year rose about 8 percent from the previous quarter to 401,149, according to the U.S. Bankruptcy Court. The national total is expected to rise further as the law change draws nearer.

Experts say filings will jump even more in the second and third quarters amid concerns over the new bankruptcy law to take effect Oct. 17. At that time, millions of Americans will be barred from protections provided under Chapter 7 of the U.S. Bankruptcy Code, which wipes out credit card and other debt that is not secured by a house or other assets. More than two-thirds of bankruptcy filers use Chapter 7.

Stephen Gager, 36, a computer technician who was left with more than $30,000 of debt after a divorce, said he is relieved to be among those who recently sought a fresh start under Chapter 7.

"I would feel better if I were able to pay it all off, but in the end it's nice to be able to at least set a new starting point," said Gager, who would become ineligible for Chapter 7 protection after October.

After paying down the bulk of his debt, Gager decided to extinguish the last $6,000 under Chapter 7 so that he could focus on studying full time.

The Bankruptcy Abuse Prevention and Consumer Protection Act will significantly narrow benefits by requiring filers who earn above the median income for a family of the same size in the same state to enter a five-year repayment plan under Chapter 13. That's instead of being able to wipe out their debt under Chapter 7, as now permitted.

[rukiddingme]

Thank God.

Thank God, I feel raped by this bk...because the guy who owes me money CHOSE bk. Rather than working his way out of the hole. Come on October. I truly believe that more often than not the creditors are the victims in bk. I guess I am just a head strong female that swims rather than sinks. There was a time in my life where I had 3 jobs to protect my credit. (Had two roommates jump rent, lease and bills when I discovered they were doing drugs) A lot of people of filing bk without a fight and that is a SHAME!!! I have a household with a 3yr old daughter fighting cancer and to be ripped off by a jerk filing BK to keep from paying me what he owes just ticks me off to no end. Where has self responsibility gone!!!???

[edwards2]

I can certainly understand how you feel. You represent the "other side of the coin" so to speak. But you cannot generalize all BK filings. I have been a part of this forum since we filed in March and an overwhelming majority of the posts are from people who have suffered medical catastrophes(we did), loss of job(s), disabilities, can't find employment, business failings, etc. I dont think it is fair to rubber stamp people who tried in vain to make ends meet. And for that matter BK was not the first choice to survive; it was the last choice. No one here that I have read bought luxury items with the intention of sticking it to the credit card companies. Filing BK is a very humiliating and embarrassing step to take. Regardless of our true reasons for filing(which most people do not know) we will forever be stereotyped as financially irresponsible and for at least years post BK be catagorized in the bad credit column. So, I truly am sorry someone did not pay you what you were due; I dont know the person and have no clue what his situation was, but I can say with absolute certainty if he deliberately scammed you he is in the minority - not the majority.

[herekitty]

As always my dear edwards2, well put.

[edwards2]

herekitty...thanks.

[coolbreaker]

Thank God, I feel raped by this bk...because the guy who owes me money CHOSE bk. Rather than working his way out of the hole. Come on October. I truly believe that more often than not the creditors are the victims in bk. I guess I am just a head strong female that swims rather than sinks. There was a time in my life where I had 3 jobs to protect my credit. (Had two roommates jump rent, lease and bills when I discovered they were doing drugs) A lot of people of filing bk without a fight and that is a SHAME!!! I have a household with a 3yr old daughter fighting cancer and to be ripped off by a jerk filing BK to keep from paying me what he owes just ticks me off to no end. Where has self responsibility gone!!!???

you really are strong, being able to do that then...

its good, this new law will prevent people from taking the easy way out in life... work and make the payments !

[Genenco]

you really are strong, being able to do that then...

its good, this new law will prevent people from taking the easy way out in life... work and make the payments !

Right and this will make a million people suffer longer then needed and thus, make you happy that they do so...Great.

[alice0427]

I know this thread is old, but people who just generalize people who file bk the way the two in this thread did get me mad enough to hinge on physical violence.

Here's how I went down without a fight. I worked two jobs, even with a tiny baby. My husband and I depleted every ounce of our savings trying to stay afloat. We cashed out our retirement plans. We begged family for money. We sold any of our valuable possessions on Ebay. My husband mowed lawns and did odd jobs for over a year, working sometimes 18 hours per day including his job with the U.S. Navy.

After all of that, we ended up completely wiped out, still broke, facing repossessions and lawsuits. I'd like to know what Little Miss Virtue would have done in our situation?

To be honest, I wish we would have just followed our attorney's advice and filed bk two years ago when he suggested it. Instead, we spent two exhausting years fighting to the death. Well, death hit us, because we are OUT of money, out of options, and almost out of time.

I guess we could have tried harder. I could kill my husband and pay off our debts with the life insurance money. Would that make the naysayers happy? Because that's about the only option I have left.

[Zapata]

Well, Alice, homicide will make that insurance policy on the hubby null and void. So that's not an option.

I am glad you posted to this thread even if it was old.

We have to face it.... on a very tempororal, mundane, societal level, we are the dregs of society for filing BK. No reason to get upset at the judgments and prejudices. I think this is where we get to really learn our TRUE WORTH and what actually COUNTS in terms of character. And that doesn't come down to dollars and cents.

As for the poster who is indignant about that guy filing bk and owing her money? Pffft! Interesting that she didn't say for 'how much'. It he owed her $10K, you can bet dollars to donuts that she would have said how much. I bet it's for a couple hundred bucks. And she's on bk forum *****ing about it instead of tending to her cancer-ridden 3 yr old? Let's talk about character!!!

[debtisbad]

We are not the dregs of society. I beg to differ. Gas prices are out of sight. Home prices are over the top. Jobs are being sent over seas. The US government is printing its own money to pay for the war in Iraq. I am not a dreg. I have always done the right thing and always will. Yes, I am filing BK but it is a business decision. I am sick and tired of this sh*t harming my health. I have aged 10 years over all of this.

[lilgoose]

Thank God, I feel raped by this bk...because the guy who owes me money CHOSE bk. Rather than working his way out of the hole. Come on October. I truly believe that more often than not the creditors are the victims in bk. I guess I am just a head strong female that swims rather than sinks. There was a time in my life where I had 3 jobs to protect my credit. (Had two roommates jump rent, lease and bills when I discovered they were doing drugs) A lot of people of filing bk without a fight and that is a SHAME!!! I have a household with a 3yr old daughter fighting cancer and to be ripped off by a jerk filing BK to keep from paying me what he owes just ticks me off to no end. Where has self responsibility gone!!!???

First of all, I want to say "Don't bring God into this" and I can say this because you are not given the right to cast stones on anyone!

rukiddingme.....Why are you here? This is a place where people can go and share with each other and know that they will not be passed judgement on....But, here you are complaining about someone who had to take that step that you are so upset over. If you would send me an address, I would gladly give you a quarter to call someone who cares....

Maybe this person really was financially on the brink or maybe they owed you money and was afraid of what you would do to them if they didn't pay you back on YOUR TERMS.

My prayers are with you and your child. Please worry about your child and not what others are doing..

These new laws are really hurting people that really need help. They are not stopping the ones who are abusing, just making them plan ahead a little more so that they can still fight and beat the system. All the while, people who need help have to be humiliated and pushed even further behind....

So, honey, the only ones that should feel RAPED, as you put it, are the ones who truly need to file and are now held back..........

[aa06a47]

There are alot of reason to file bk, some good, some bad. I do not believe most people on this thread want to be here. I know, even as idiotic as my reason for being here is, that I do not want to be here.

However, a long time ago, I was owed $895. The people who owed me the money filed bk and put me on the list of creditors and I received a notice. I remember feeling the same way as rukiddingme. I think it just depends on where you are in life and how many time you have fell in the sewer.

[jane taylor]

I've learned that I am never in a position to judge someone. I haven't and won't walk in his/her shoes. I may disagree with someone's behavior, but the person is not bad. I've worked in mental health for years and continue to be outraged that people judge others on appearances and circumstances. We don't get to know each other because of fear.

It does bother me that people try to take advantage of others, the system, etc. and then the government tries to slap a "band-aid" on it. (i.e. the BK reform and other such knee-jerk reactions) Band-aids aren't effective for gaping wounds!

I have been guilty of criticizing others just like everyone else. We're only human!

[alh]

What a lot of people fail to miss I think is that sometimes you can get in situations, through no fault of your own, that no matter how many hours you work, or how many things you did without, you still could not pay off your debt.

When if you are late on one payment and your interest rates go to 30% (on all you credit cards) plus late fees, even someone with a stable financial history could get sucked in. Add to that a situation of a job loss or large medical bills or the like and you can get into places where you could work 16 hours a day,pay all you earn each month, and still owe more that you did 30 days ago.

Yes, the number of bankruptcies have double over the past 10 years. What is often not put with those statistics is that during the same period, credit card company profits have tripled.

[aa06a47]

What a lot of people fail to miss I think is that sometimes you can get in situations, through no fault of your own, that no matter how many hours you work, or how many things you did without, you still could not pay off your debt.

When if you are late on one payment and your interest rates go to 30% (on all you credit cards) plus late fees, even someone with a stable financial history could get sucked in. Add to that a situation of a job loss or large medical bills or the like and you can get into places where you could work 16 hours a day,pay all you earn each month, and still owe more that you did 30 days ago.

Yes, the number of bankruptcies have double over the past 10 years. What is often not put with those statistics is that during the same period, credit card company profits have tripled.

Yes, they have trippled there profits. CC companies lowered there min payments which allowed people to borrow more money. If I were to add up all the money I have paid my credit card companies the past 5 years, they are loosing very little on my bk, (I have probably paid close to what I've borrowed, its just the balances never go down..it is all interest)

Expect the economy to cool down substantially now that people won't be able to borrow as much with the increased minimums. I would also expect soon the bk courts to have alot more bk filers soon when people get fed up with the amount of debt and what they are being asked to pay.