Bankruptcy Reform: Bad News

There's really bad news on the bankruptcy reform front. As expected, the controversial new law is making things worse for folks who, in eight out of ten cases, were forced into dire financial straits by circumstances beyond their control. Almost all of the 61,355 people who have been seen so far by credit counselors can't pay back any of their debts.

These are the key findings of a study just released by the National Association of Consumer Bankruptcy Attorneys (NACBA), called "Bankruptcy Reform's Impact: Where Are All the Deadbeats?" NACBA surveyed credit counseling firms that have been approved to provide required credit counseling services to people before they can file for bankruptcy.

While the credit counseling requirement was designed to steer people who could repay their debts into a debt management plan, the study concludes this "simply imposes new costs and time burdens on individuals who can ill afford either."

As NACBA executive director Brad Botes puts it: "Contrary to the claims of the proponents of bankruptcy law changes that they would zero in on the alleged legions of 'deadbeats' who supposedly were crippling the U.S. economy with 'billions of dollars in losses associated with profligate and abusive bankruptcy filings,' the federal bankruptcy law changes ... are doing no measurable good whatsoever. "

"Instead," Botes explains, "they have put new hurdles in the path of people who are already flat on their back due to financial crises over which they have no control, such as the loss of a job, catastrophic health care bills, and so on."

Bankruptcy filings are down, perhaps because many Americans may mistakenly believe that due to the new law, they no longer have the option. "Even though the process is now more cumbersome, time consuming and expensive than before," Bote recommends "consumers who need help should still seek out a bankruptcy attorney to explore their options and figure out how to navigate this trickier and more confusing process."

For more info about the bankruptcy study, listen to an online interview between credit expert Gerri Detweiler, a contributor to this blog and host of EverydayWealthRadio.com, and Maureen Thompson of the National Association of Consumer Bankruptcy Attorneys. (If this interview is no longer listed on the front page, simply type Maureen Thompson into the search field to access the interview. )

Comments

[Pablo]

Yes, and do the Bankruptcy laws have anything to do with the rising of the minimum payment on credit cards? Hmmm...

In any regard, people still need to know how to clear up those inaccuracies on their credit and I have found this site helpful...

http://www.brokencredit.com

[Private Bad Credit Lenders]

The internet debt profile is so high in the western world!