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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: Nancy who wrote (71329)8/26/2009 7:29:41 PM
From: Ilaine2 Recommendations  Read Replies (1) of 74559
 
The 2005 changes to the bankruptcy law were mostly procedural, not substantive.

In a nutshell:

~ Debtors must take a two hour consumer credit counseling course prior to filing and a two hour financial literacy course after filing.

~ Debtors must provide their last six months paystubs and last year's tax return so that there is proof of income.

~ If the debtors are above the median income for their state they may be forced into a Chapter 13 repayment plan of all, or, far more likely, some of their debts.

I represent debtors in both Chapter 7 (liquidation) and Chapter 13 (repayment) cases.

It is very, very rare for a debtor to not be able to discharge all or most of credit card debts. It was less than 3% before the law changed and possibly less than that now, due to unforeseen loopholes in the law.

For example, we are now filing "zero percent plans" (where the unsecured creditors get zero on the dollar), or more likely plans where the unsecureds get 2%-5%. Before the law was changed I would not have dared file a plan that paid less than 15%. We follow the letter of the law. Congress has spoken, we obey.

The 2005 changes were not written by bankruptcy lawyers, either creditor lawyers or debtor lawyers, nor judges. We think they probably were written by low level staffers or even interns.

"Your government inaction."
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