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New Bankruptcy Law
When the next credit card representative comes to campus, trying to market the newest MasterCard or Visa -- run away! Congress has made it more difficult for individuals to declare and extricate themselves from bankruptcy. Although the idea the new bankruptcy legislation is supposed to support, namely that consumers must become more fiscally responsible, may seem neutral on its surface and merely designed to reign in an overspent America where "the average credit card balance is $12,000. And 10 to 15% of households with credit card debt are barely able to pay it off," in fact this new piece of legislation advances a number of factional interests in Congress at the expense of other interests. (Willis, 2005) While the financial industry and credit card companies may be pleased by the 2005 legislation, consumer groups and legal action groups are not.
The image of creating a more responsible and thrifty consumer may have been the 'selling point' of the new legislation to the vast majority of the American public. Don't be seduced by credit card companies, touted the bill's advocates in Congress. However, these politicians might have been also just as apt to add -- oh yes, never get sick and require costly medical procedures, never lose your job, and for heaven's sake never care for a child with a chronic ailment. These...
In fact, the legislation was deemed so anti-consumer friendly that CNN's personal financial advisor cautioned "if you've been considering filing for bankruptcy protection, but have delayed, you should go ahead and start the paperwork now. Once the many elements of the law take effect in 180 days (six months), bankruptcy as we know it will have changed to an unfriendly landscape," for the average, middle class American. The new law makes it more difficult for filers with a median income higher than what is deemed to be 'average' by Congress to file for bankruptcy and also more cumbersome. (Willis, 2005)
"The price of bankruptcy will go through the roof," said Brian Kimber, a West Palm Beach bankruptcy attorney. "The average consumer won't be able to do it." Currently, it is typical for a Chapter 7 filing to cost about $1,000 in attorney's fees, but at minimum with the new legislation the cost of filing for Chapter 7 could go up, on average, to the $2,000 to $2,500 ranges. (Sahadi, 2005) According to a recent April 21, 2005 AP Wire, "The law, which will take effect in six months, will force many people to work out repayment plans instead of having their debts erased," repayment plans that require…
Work Cited
AP Wire. (21 Apr 2005) "Bankruptcy Bill Now Law." New York Times Website.
Retrieved 22 Apr 2005 at http://www.nytimes.com/2005/04/21/business/21bankruptcy.html?adxnnl=1&; adxnnlx=1114167807-kAmkxc1y2eDekjv7KJrU5Q
Sahadi, Jeanne. (17 Jun 2002) "Red Flags you'll get a raw deal in a debt management plan." CNN Money. Retrieved 22 Apr 2005 http://money.cnn.com/2002/06/17/pf/banking/q_debtconsolidation/
Sahadi, Jeanne. (14 Apr 2005) "Bankruptcy Fees Could Skyrocket." CNN Money. Retrieved 22 Apr 2005 at http://money.cnn.com/2005/04/13/pf/bankruptcy_bill/index.htm
Willis, Gerri. (18 Apr 2005) "5 Tips: Coping with the new bankruptcy law." CNN Money. Retrieved 22 Apr 2005 at http://money.cnn.com/2005/04/18/pf/saving/willis_tips/
The recent impositions on personal bankruptcies attracted the attention but the legal experts opined that new rules could have extensive effects. In common, in the words of a bankruptcy lawyer Jon Schneider of Goodwin Procter in Boston, "There is probably going to be a raft of filings in September to avoid this new law." (Law could trigger Chapter 11 surge) D.J. Baker of Skadden Arps a New York lawyer,
It provided for fast proceedings, encouraged debtors to reschedule their obligations rather than liquidate and helped creditors recover their claims against bankrupt estates. The 1994 Act also created the National Bankruptcy Commission, charged with investigating further modifications of the bankruptcy law. Latter laws, however, disregarded many of the Commission's recommendations. In April 2005, President George W. Bush signed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Many
Similarly, establishing payment plans with vendors may help reduce monthly costs and free up extra cash. The benefit of such restructuring is that it would allow the company to avoid the highly invasive Chapter 11 process, where there is a loss of control as creditors and a court get to weigh in on company operations. The downside of debt restructuring is that Interstate would still have to pay its
Interest rates will be lowered reaching 3.4% in 2011 and borrowers won't have to begin repayments until they are making about $15,000." (Education Portal, 2007) Furthermore, the effectiveness of this bill is questioned because after 2011 interest rates will quickly climb on these loans again. The work entitled; "Student Loan Lenders Creating a New Credit Bubble" states of investors, that they are: "...clamoring to purchase bundled student loans. According to
Off-duty time does not extend the 14-hour period. 15-Hour on-Duty Limit May not drive after having been on duty for 15 hours, following 8 consecutive hours off duty. Off-duty time is not included in the 15-hour period. 60/70-Hour on-Duty Limit May not drive after 60/70 hours on duty in 7/8 consecutive days. A driver may restart a 7/8 consecutive day period after taking 34 or more consecutive hours off duty. 60/70-Hour on-Duty Limit May not
Sometime the debtor is able to successfully reduce its liability and returns to profitability but quite often it returns to seek the court's protection again and sometime the end result is liquidation. Under Chapter 11 protections, the debtor gets an automatic protection from all creditors. The unsecured creditors cannot lay a claim on assets and secured creditors are also prevented from foreclosing on their collateral. A Chapter-11 company also gets