Earlier this year, a new bankruptcy bill was signed into law, making it more difficult for consumers to declare bankruptcy. The credit industry loved this and spent a lot of money lobbying for the bill, as they stood to gain billions of dollars in fees. Apparently, this isn’t happening [msn].
The number of bankruptcy filings before the deadline far outnumbered expectations. The drop off following the rule change, which requires higher-income filers to enter repayment rather than full bankruptcy, is less then expected.
Under the old law, about two-thirds of Chapter 13 cases never completed their repayment plans; that percentage isn’t expected to change much under the new law…
Bankruptcy protection is important and should exist for those who truly need it, and filers should not be required to jump through multiple hoops — multiple hoops on fire — in order to take advatange of that protection. Of course, the problem is when people take advantage of the existence of that protection, but that’s a cost of doing business.
By the way, a similar bankruptcy bill was passively vetoed by President Clinton in 2000.
Updated February 7, 2012 and originally published December 8, 2005. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.