New Bankruptcy Law, ‘and Reposession

Posted in Repo Homes, August 31st, 2006 |

A new bankruptcy law has actually made it more difficult and costly for Americans to file for financial relief, but it has apparently not done anything to lower the amount of people who are deep in debt and looking for legal help.

A flood of filings came in the fall as thousands rushed to apply before the harsher federal law took effect in October. In the weeks that followed, the flow of debtors slowed to a trickle, but lately there have been more and more debtors emerging, say lawyers who specialize in bankruptcy cases.

If the flow of filers keeps rising, it might signify there were not as many people filing for not as serious reasons as bankruptcy reform advocates believed.

That financial vulnerability has been especially pronounced in Georgia. State residents filed for bankruptcy at a higher rate than all but two states last year: one household in every 42. The national rate was one in 73.

This past October, with the new law’s effective date looming, a record number of Georgians — 18,457 — filed.

In November, there were only 1,551 people filing for bankruptcy. But the filings started to climb again in December, rising 45 percent to 2,251.

Overall filings usually decline in January, and they did again this year. But there was a rise in the number of people filing for Chapter 7 — the request to erase all debts.

Nearly 3 million Americans filed for bankruptcy protection last year.

Experts say people come in to declare bankruptcy because they have run out of alternatives.