Bankruptcy : Bankruptcy Law Change Anniversary

Credit card companies lobbied for nearly a decade. Congress debated numerous versions of the bill. Then, on October 17, 2005, the "new bankruptcy law" took effect. The deceptively-named Bankruptcy Abuse Prevention and Consumer Protection Act had a sudden, dramatic impact--in the weeks leading up to the effective date of the new bankruptcy law, hundreds of thousands of people rushed to file for bankruptcy protection. Some of these people might have otherwise waited months to file. Some might never have filed at all. Then, immediately after the new law took effect, filings screeched nearly to a halt. The phones stopped ringing in bankruptcy attorney's offices. Bankruptcy courts received a trickle of filings, at best. Trustees found themselves without work. And then a surprising thing happened. Well, surprising to the credit industry, and perhaps to Congress. It came as no surprise to consumer bankruptcy attorneys, or to economic experts who had been pointing out for years that making the bankruptcy process more complicated wouldn't do a thing to solve the underlying problem. One year after the bankruptcy reforms, bankruptcy filings are gaining momentum. They haven't quite reached pre-law-change levels yet, but they're climbing every quarter, and that shouldn't come as surprise: Congress and the credit industry complicated the bankruptcy process in an attempt to discourage filings, but they didn't provide bankruptcy petitioners with any new options. People are still facing huge uninsured medical bills. More than a hundred thousand workers lose their jobs to mass layoffs every month. The minimum wage hasn't increased in eleven years. And just as they always have, those people often find that there's no realistic alternative to bankruptcy. The credit counseling agencies that work with them are finding that, too. So after ten years of work, lobbying, debating, voting, and rewriting, we're right where we started. Except, of course, that filing for bankruptcy is a bit more expensive and time consuming than it used to be.