Gold9472
10-15-2005, 01:28 AM
State receives record number of bankruptcy filings
http://www.duluthsuperior.com/mld/duluthsuperior/12894808.htm
DINESH RAMDE
Associated Press
10/14/2005
MILWAUKEE - To Candace Burks, the irony was hard to swallow. She had trouble finding enough money to pay bill collectors every month, but she couldn't file for bankruptcy until she could afford a $209 filing fee.
It took the Milwaukee woman two months to scrape together the money but she made sure she had it in time to file for bankruptcy this week, days ahead of a new federal bankruptcy law that takes effect Monday.
"The filing fees go up next week and it'll be harder to file. I can barely afford it now - how would I afford it then?" said Burks, a 21-year-old daycare worker. The filing fee rises to $274 on Monday.
Burks isn't the only one trying to beat the deadline. Wisconsin's two bankruptcy courts, in Madison and Milwaukee, have been swamped by a record number of bankruptcy petitions. Through August, an average of 90 Wisconsin residents applied for bankruptcy each day in 2005. In September, that number jumped to 160 filers per day.
"We were expecting a rush, but it's been a little heavier than we expected," said Christopher Austin, the clerk of the U.S. Bankruptcy Court in the eastern district of Wisconsin. "We got 600 petitions (Tuesday). We never expected to get 600 in a single day."
Filers appear to be motivated by a new law passed in April that makes it harder for consumers to seek protection from creditors. The 500-page statute will require bankruptcy attorneys to file more paperwork and provide more verification of their clients' finances.
Rising filing fees combined with the cost of lawyers' additional work can mean costs to a client that are double or more under the new law than under the current system.
It was the fear of these additional costs that compelled Burks into the Milwaukee bankruptcy court. Lacking health insurance, she had gone into debt after amassing medical bills following a car accident, and has struggled to keep creditors at bay ever since. She said she would probably have filed for bankruptcy anyway within a year, but the new law will make filing too prohibitive.
Bankruptcy lawyers across the state are coming across thousands of people with similar stories. In fact, some attorneys like Bruce Lanser of Milwaukee are so swamped with cases that they had to turn down prospective clients.
"Business this month and last month have been up 100 percent compared to where it ordinarily would be," he said. However, he says much of his business is from current clients who were already in the pipeline, whose filings had to be expedited to meet the deadline.
Todd Esser, another Milwaukee bankruptcy attorney, says he's most concerned about clients who are under the mistaken impression that the new law will eliminate the option of bankruptcy.
"We've been working a lot of hours helping people evaluate their cases and also to understand that even after the change in laws they'll still have relief available in the form of bankruptcy," Esser said. He said more than half the people who have come to him in the last two weeks had better options than bankruptcy available to them, including creating a debt management plan or liquidating certain assets.
After Monday, the requirements for bankruptcy protection become more stringent. People with above-average income, as determined by a standard "means test," will be barred from filing for Chapter 7 protection, where debts may be wiped out entirely. Instead, they will have to file more restrictive Chapter 13 bankruptcies, which require a five-year repayment plan.
The new law was pushed by groups including credit card companies that argued it was too easy for individuals to run up debts, declare bankruptcy and be legally allowed to erase those debts.
Ralph Anzivino, who teaches bankruptcy law at Marquette University Law School, says credit card companies largely have themselves to blame.
"For people who file for bankruptcy, it's almost never a case of financial irresponsibility. You have credit card companies who give credit so loosely, like to young people just getting out of high school. What do they know about responsible spending?" he said. "This is clearly a very, very pro-creditor bill."
http://www.duluthsuperior.com/mld/duluthsuperior/12894808.htm
DINESH RAMDE
Associated Press
10/14/2005
MILWAUKEE - To Candace Burks, the irony was hard to swallow. She had trouble finding enough money to pay bill collectors every month, but she couldn't file for bankruptcy until she could afford a $209 filing fee.
It took the Milwaukee woman two months to scrape together the money but she made sure she had it in time to file for bankruptcy this week, days ahead of a new federal bankruptcy law that takes effect Monday.
"The filing fees go up next week and it'll be harder to file. I can barely afford it now - how would I afford it then?" said Burks, a 21-year-old daycare worker. The filing fee rises to $274 on Monday.
Burks isn't the only one trying to beat the deadline. Wisconsin's two bankruptcy courts, in Madison and Milwaukee, have been swamped by a record number of bankruptcy petitions. Through August, an average of 90 Wisconsin residents applied for bankruptcy each day in 2005. In September, that number jumped to 160 filers per day.
"We were expecting a rush, but it's been a little heavier than we expected," said Christopher Austin, the clerk of the U.S. Bankruptcy Court in the eastern district of Wisconsin. "We got 600 petitions (Tuesday). We never expected to get 600 in a single day."
Filers appear to be motivated by a new law passed in April that makes it harder for consumers to seek protection from creditors. The 500-page statute will require bankruptcy attorneys to file more paperwork and provide more verification of their clients' finances.
Rising filing fees combined with the cost of lawyers' additional work can mean costs to a client that are double or more under the new law than under the current system.
It was the fear of these additional costs that compelled Burks into the Milwaukee bankruptcy court. Lacking health insurance, she had gone into debt after amassing medical bills following a car accident, and has struggled to keep creditors at bay ever since. She said she would probably have filed for bankruptcy anyway within a year, but the new law will make filing too prohibitive.
Bankruptcy lawyers across the state are coming across thousands of people with similar stories. In fact, some attorneys like Bruce Lanser of Milwaukee are so swamped with cases that they had to turn down prospective clients.
"Business this month and last month have been up 100 percent compared to where it ordinarily would be," he said. However, he says much of his business is from current clients who were already in the pipeline, whose filings had to be expedited to meet the deadline.
Todd Esser, another Milwaukee bankruptcy attorney, says he's most concerned about clients who are under the mistaken impression that the new law will eliminate the option of bankruptcy.
"We've been working a lot of hours helping people evaluate their cases and also to understand that even after the change in laws they'll still have relief available in the form of bankruptcy," Esser said. He said more than half the people who have come to him in the last two weeks had better options than bankruptcy available to them, including creating a debt management plan or liquidating certain assets.
After Monday, the requirements for bankruptcy protection become more stringent. People with above-average income, as determined by a standard "means test," will be barred from filing for Chapter 7 protection, where debts may be wiped out entirely. Instead, they will have to file more restrictive Chapter 13 bankruptcies, which require a five-year repayment plan.
The new law was pushed by groups including credit card companies that argued it was too easy for individuals to run up debts, declare bankruptcy and be legally allowed to erase those debts.
Ralph Anzivino, who teaches bankruptcy law at Marquette University Law School, says credit card companies largely have themselves to blame.
"For people who file for bankruptcy, it's almost never a case of financial irresponsibility. You have credit card companies who give credit so loosely, like to young people just getting out of high school. What do they know about responsible spending?" he said. "This is clearly a very, very pro-creditor bill."