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NEWS: Bankruptcy Filings Soar

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posted on Oct, 13 2005 @ 09:06 PM
Changes to bankruptcy rules generated by the passing of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 will go into effect on Monday, October 17. The changes have wide ranging implications for individuals and businesses. As a result, the number of bankruptcy filings have dramatically increased since the announcement of the new rules.
With just a few days left before a new law will make it harder and more expensive to go broke in the legal sense, a growing number of consumers are rushing to the courthouse to file for bankruptcy protection from creditors. Bankruptcy filings by businesses also are up in advance of the new law, which takes effect Monday, although not as much as some experts expected.

"In September we filed about 60 [individual bankruptcy] cases; in October I've already filed 50, and I expect we'll file another 60 or 70 between now and Sunday night," Gary Fischoff, an attorney for the firm Steinberg Fineo Berger and Fischoff in Woodbury, said yesterday. "Everybody who was ever thinking about filing for bankruptcy has pulled their head out of the sand and come running in."

Please visit the link provided for the complete story.

The US economy is driven by an incredible level of consumption. That consumption rate is enabled and driven by enormous levels of consumer debt. Over the last few decades, more Americans have been making poor choices when it comes to this debt and bankruptcies have resulted. The Bankruptcy Abuse Pervention and Consumer Protection Act of 2005 was apparently Congress' response to this growing problem.

The new law, it appears, is far from perfect. Opponents noted that the legislation unfairly targeted individuals rather than businesses that abuse the bankruptcy statutes.

Given the outrageous costs associated with medical expenses, it is disturbing to learn that amendments to the then pending legislation that sought to exempt individuals driven to bankruptcy by medical debts were defeated.

My fear is that the new rules will do nothing to slow the level of consumption and that the US economy is headed for a precipice. There are already indications that the housing market around the country is heading for a collapse - this is particularly troubling because so many Americans fund their spending by borrowing against the (artificially inflated?) value of their home. If the housing market collapses, the so called "wealth" and "credit worthiness" of millions of Americans will evaporate overnight.

Clearly, the new law should reduce the number of successful bankruptcy filings. It is, unfortunately, unclear if this will help or hurt our collective ability to recover from economic disaster.

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posted on Oct, 13 2005 @ 11:19 PM
Your link to the article published on, while being very informative about the new legislation affecting businesses, requires registration to read.

Thought you'd want to know that incase you weren't aware.

posted on Oct, 14 2005 @ 05:14 PM
Drat. It came up for me when I posted it. Sorry bout that.


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