Report: Bankruptcy �reforms� Failing

[FoolAndHisMoney]

Not what they thought it would be.

http://www.nacba.org/home.asp

[BassBoy]

LMAO! Duh. All that time and money spent to pass a law that doesn't work.

[Minnymouth]

Yeah, they may have "cut their own throat" by being so greedy..............

[keepmine]

Not only has the law failed but, we added $280MM to the budget deficit to implement it.

Still, the Congressional Budget Office said the legislation allocated little funding for its various mandates. The total price tag could reach $390 million through 2010, the report said. That is offset some by $110 million in revenues, mostly from fee increases, which would leave the initiative $280 million in the red.




By Richard Burnett | Sentinel Staff Writer
Posted May 22, 2005


The nation's new bankruptcy law, aimed at making more debtors pay more of their bills, will drive the U.S. government itself further into debt, according to government estimates.

From new judges, lawyers and clerks to new auditing policies, the cost of bankruptcy reform will mean almost $300 million in red ink over the first five years after the law takes effect in October, according to a forecast by the Congressional Budget Office.

That's a tiny blip in Washington, D.C. -- where measures like the Medicare prescription-drug benefit cost hundreds of billions of dollars -- but some experts said it is a sad commentary on the new law, passed last month by Congress.

"The irony here is the idea of the federal government cracking down on people who don't pay their bills, when Washington itself is in the business of not paying its bills," said Robert L. Bixby, head of the Concord Coalition, a nonpartisan group that advocates lower deficits. "There is a hypocrisy to it all."

The law will make it tougher for people to extinguish their debt and get a fresh start through bankruptcy. Supporters say it will help curb fraud and abuse and prevent many scofflaws from evading their debts.

It is also expected to force hundreds of thousands of people into debt-repayment plans, further taxing an already stressed bankruptcy-court system and generating millions of dollars in revenue for credit-card companies and other creditors.

The financial-services industry lobbied hard for the new law, pouring almost $40 million into political campaign coffers in the past two years alone, according to the Center for Responsive Politics, a nonpartisan Washington, D.C.-based watchdog group. More than 60 percent of the funding went to Republican legislators.

Industry officials said the measure provides a long-needed balance to a system that has become too often abused.

"This law is laying the groundwork for the bankruptcy system to be used in a more fair way for both creditors and debtors," said Laura Fisher, spokeswoman for the American Bankers Association.

The system will still provide a safety net for those who really need it, she said, but it will also be better able to prevent people from exploiting loopholes and using bankruptcy as a financial-planning tool.

Still, the Congressional Budget Office said the legislation allocated little funding for its various mandates. The total price tag could reach $390 million through 2010, the report said. That is offset some by $110 million in revenues, mostly from fee increases, which would leave the initiative $280 million in the red.

Bankruptcy court officials and trustees expect to see a major impact in the coming years as many filers are diverted into Chapter 13 repayment plans instead of Chapter 7 liquidation. They will need more workers at every level, from judges and lawyers to support personnel, because of the demands of monitoring, auditing and administering more debt-repayment plans, officials said.

Despite the record number of bankruptcies in recent years, bankruptcy courts have been reducing personnel and increasing their reliance on technology. More than 530 jobs have been eliminated in budget cutbacks since October 2003, according to the Administrative Office of the U.S. Courts.

The new law has authorized funding for 28 new bankruptcy judges, but that fell short of the 47 that had been requested, spokesman Dick Carilli said. They are the only positions actually funded in the new law.

The U.S. Bankruptcy Court for the Middle District of Florida -- which includes Orlando, Tampa and Jacksonville -- is down almost 20 jobs from five years ago, court officials said. Cases at the nation's third-busiest bankruptcy district have risen more than 100 percent since 1993, with no increase in judges, according to court records.

With budgets so tight in recent years, court officials are skeptical about getting enough new money to match the increased workload.

"I think we'll also see a big rise in cases in the coming years, but it may be wishful thinking that we'll see the increase in funding that we really need," said David Oliveria, chief clerk for the middle district. "I don't know of any appropriations or emergency funds that are forthcoming."

Bankruptcies have already begun to rise again as people rush to file before the law takes effect, he said.

"We saw a spike of filings right before the president signed the new law, and we'll probably see another spike before October when it takes effect," Oliveria said.

The district handled 53,535 cases in 2004, down 6 percent from 2003. It was the first year this decade that bankruptcies had decreased.

[NASCAR20FAN]

I just paid $50 for pre counseling. Now I'll have to pay another $35 for post counseling. I don't understand why filing is $85 for the counseling + $274 for filing fees + $40 for a credit check + lawyers costs! I'll barely make it.

[fellowpoorman]

suck it up, it s part of the plan

[Minnymouth]

Considering the debt that all of us are discharging - THAT IS A DROP IN THE BUCKET............moneywise.....
Suck it up - pay the freight - and try to get that fresh start....
NOTHING IN THIS WORLD IS FREE - neither advice or air - people pay for advice and if you need oxygen - you pay for it too............
It's a small price to get a "fresh start" in life - debt free if possible.............
My thoughts,

[alh]

As a side note, if it is truly a hardship, it is possible to get the 274 filing fee waived. Not sure of the process, but it can be done.

[annikasaunt]

Ny atty told me to ask to get the fee waived because they are usually non profit, the one here is anyways, and when I asked them to waive the fee they told me that I make too much money according to their charts!!
I'd love for them to show me where I had the money!!! I had to pay in order to get the stupid certificate tho! All just for them to tell me what I already knew!! My atty says its the biggest rip off with the new laws.