MSN Money - Bankruptcy law backfires on credit card issuers#Rating

2005 BARF - Let the "I told you so's" Begin

I don't need to tell any of my fellow Afscme 3357 folks what chaos the Bankruptcy Reform Act of 2005 brought. The October deadline brought record numbers of filers trying to beat the new law.

That's fine said the law's backers, that will just mean fewer bankruptcies later. And, for a while, that was true, but the reprieve is showing itself to be short-lived. Bankruptcy numbers are creeping up as debtors who missed the October deadline complete the counseling process necessary to file for under the new law.

According to the article linked below (from MSN Money, written by Liz Pulliam Weston), counselors report that only 3% of those applying for counseling have sufficient resources to enter a Chapter 13 plan, and fewer still have the ability to complete one.

As to the counseling process itself, even the counselors admit that it is often a pointless exercise. Quoting the MSN Money article:

That's certainly been true at Riverside, Calif.-based Springboard, which counseled 2,200 pre-bankrupts between Oct. 17 and Nov. 28, 2005, said President Dianne Wilkman. Wilkman said her counselors, who mostly talk with customers by phone, sometimes have to strain to average the 90 minutes the Justice Department requires of pre-bankruptcy counseling sessions because their clients' situations are so cut and dried.

"After 45 minutes you're left with saying, 'So, what about those Dodgers?'," Wilkman said. "But then with other clients with more complex situations, you use much more than 90 minutes."

MSN Money - Bankruptcy law backfires on credit card issuers#Rating