BALTIMORE, Md. - What difference does a year make? Ask a
A year after the implementation of the Bankruptcy Abuse
Prevention and Consumer Protection Act of 2005, bankruptcy filings
are still significantly off from what they were before the new law
took effect last October.
"I can tell you I didn't see any clients between October 17 and
the end of last year," said Baltimore lawyer Mark F. Scurti, who
handles Chapter 7 and 13 bankruptcy cases.
While bankruptcy clients began to cross his threshold again in
January - and the numbers of new clients have increased
"tremendously" within the last two months - they are still half of
what they were prior to October 2005, he said.
Part of the problem, he said, was that some debtors didn't even
realize that they could still file for bankruptcy.
"Somehow word was out after October 17 last year that bankruptcy
was no longer an option for people and that they were pretty much
out of luck," he said. "Now that folks are finding out that that is
not the case - we're starting to see the numbers coming back through
our doors with respect to looking at bankruptcy as an option."
Lawrence F. Regan Jr., a Rockville lawyer who also handles
Chapter 7 and Chapter 13 cases, attributes the downturn to more than
"A lot of people are not going to file their cases until they are
compelled by circumstances to do so," he said. "The process is so
unpleasant now that they are not going to do it until they are
actually hit with the garnishment or they receive the notice of
foreclosure in the mail."
The new law, intended to deter debtors from filing petitions for
bankruptcy protection, pushes them into Chapter 13 reorganization
and debt payment plans rather than Chapter 7 liquidation and debt
forgiveness plans. It went into effect Oct. 17, 2005.
"In the opinion of my membership, it's not very friendly to
consumer debtors or to their attorneys," said Douglas R. Gorius,
chair of the Maryland State Bar Association's section on consumer
bankruptcy. "It's especially hard on attorneys."
Despite the reduced caseload, individual cases now require
significantly more paperwork and time before a bankruptcy judge,
Gorius said. Many lawyers who used to practice bankruptcy law got
out of the business altogether as a result; those who remain are
more experienced but also are charging more for their services.
"I don't think Congress' goal of forcing more people into Chapter
13 has been achieved the way it was expected to be achieved," he
said. "Lots of Chapter 7 debtors are now required to file Chapter
13, but not as many as the big banks and credit lenders had hoped. …