Congress recently passed the most sweeping bankruptcy
legislation in more than twenty five years. The Bankruptcy Abuse
prevention and Consumer Protection Act was written to make it
harder for most personal bankruptcy filers to have their debt
swept away through a Chapter 7 filing. The new law will require
that potential bankruptcy filers pass a "means test" and most
will not qualify for the Chapter 7 filing.
Instead, they will have to file under Chapter 13, which requires
a court-defined repayment schedule of up to five years. This
legislation, considered by its detractors to be a "wet, sloppy
kiss" to the credit card companies, has many people justifiably
concerned about how to approach their problem debt. Once concern
that has largely not been addressed is the fact that it may be
considerably more difficult to hire a bankruptcy attorney once
the new legislation takes effect in October 2005.
The existing bankruptcy law makes a personal filing a fairly
simple and routine procedure. Most personal filers file under
Chapter 7. The court eliminates their obligation to repay their
debt, and the debtor is allowed to make a fresh start.
This does not come without cost; the bankruptcy filing will stay
on the debtor's credit report for a period of ten years. Legal
costs for hiring an attorney for a Chapter 7 filing will vary
from state to state, but the process typically involves just a
few hours of billing time.
The new law, which will require most bankruptcy filers to apply
under Chapter 13, is different. Not only is the filing procedure
more complicated, resulting in two to three times the legal
fees, but the new legislation holds attorneys liable if
incorrect financial information is filed on the part of a
client. This leaves lawyers vulnerable to lawsuits from their
clients as well as the bankruptcy trustees involved in the case.
For the average consumer, this means that it will become both
more difficult and more expensive to find a competent attorney
to handle their bankruptcy case. Many attorneys who handle
bankruptcy cases on a part-time basis, including those in small
towns who handle a variety of cases, may simply decide not to
handle bankruptcy anymore. For them, the risk of a lawsuit may
mean that it simply isn't worth their while to handle such
cases.
Attorneys who specialize in bankruptcy law will undoubtedly
raise their rates, partly because of the increased demand caused
by fewer lawyers doing such work, and partly because of the
increased liability.
Anyone who has problem debt now and is considering filing for
bankruptcy should probably do so as soon as possible. It would
be far better to hire an attorney now, when you might not need
one, then to try to hire one later, when one may not be
available. It is better to be safe than sorry.
Copyright 2005 Leadsandtraffic.com
About the author:
Talbert Williams offers debt consolidation, debt reduction,
credit card debt referrals and advice. For more information,
articles, news, tools and valuable resources on debt solutions,
visit this site:
http://www.1debtfreedom.com
