Wednesday, December 14, 2005

New Penalties Tie Up Bankruptcy Volume

This East Valley Tribune provides some insight into how the new bankruptcy law works. "Bankruptcy filings have plummeted across Arizona and the Valley since federal legislation took effect in mid-October making it harder to erase consumer debt. 'The only explanation I can give is all the people who would have filed if there was no law change were condensed because they were in fear of the impact of the new legislation on their situation, on whether they have success in going through the bankruptcy process,' said Terrence Miller, clerk of the U.S. Bankruptcy Court of Arizona."

"With the new law in effect, people with incomes above a certain level will be required to repay credit card charges, medical bills and other obligations under a court-ordered bankruptcy plan. 'I think that once the bankruptcy attorneys become familiar with all the intricacies of the new law, they’ll have to start to see some additional clients and they’ll start to file some cases,' Miller said."

"Nearly half of the Chapter 13 cases filed since mid-October have been dismissed, and there are penalties that now come into play."

"'Since the law changed, if you’ve had one bankruptcy case dismissed within the preceding 12 months, the automatic stay, which protects you from foreclosure, repossession, garnishment and levy, will expire in 30 days,' said Anthony Clark, a bankruptcy attorney with offices in Mesa and Phoenix. 'If you had more than one case dismissed within the preceding 12 months, no automatic stay goes into effect.'"


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