It looks like I'll be talking about bankruptcy reform forever. Ugh. Tom Blumer posted a comment this weekend that people should see, as well as my response.
The nature of the debate was whether it's "Harder" to file bankruptcy under the new law. I say no, Tom says yes. And we're both right.
Tom says it's harder because it's so much more expensive. That's indisputably true. It will be harder to pay for bankruptcy in six months. But I wasn't talking about that; I was talking about whether or not it will be "Harder" to qualify for bankruptcy. I'm not convinced that even 10% of BK filers will have a problem. This was probably my fault for not being clear enough in what I was talking about.
Of course, we're already seeing the beginnings of a bankruptcy boom. Anyone who is even considering filing bankruptcy is being urged to do so now to avoid having to deal with the new law. Most people in the industry expect the bankruptcy courts to be jam-packed for the next six months.
So in October, when the new law takes effect, and bankruptcy filings drop precipitously, the press will cackle "It's because bankruptcy is too hard to get now!" But really, it'll just be the end of the glut, and all the people who need bankruptcy will have filed already. And we won't really know for a while if bankruptcy is proving to be harder to get, because the media will have scared all of the debtors into filing before then.
It may turn out that bankruptcy will be harder to access, not necessarily because of the courts, but because bankruptcy attorneys will have to be selective in choosing clients to represent. And that may stymie a few folks. We'll see this winter.
Speaking of media bias...
http://www.msnbc.msn.com/id/7574436/#survey
This is a poll only a Republican could have written.
Posted by: Jeff Michael | April 25, 2005 at 09:38 AM
Jeff, throughout this whole BK-reform debate and hurry-up-and-wait implementation (since what, 1996 or 8?), I've had little interest. Personally, I loath the kinds of politics (on both sides) that always seeks for government to legislate some sort of advantage to one industry over another. As such, I've ignored both those who predict fortune for my business (debt settlement) and those who predict doom.
In all the wrangling, I've yet to see anything that:
1) puts more money in people's pockets or lowers their living expenses significant enough to pay their debt faster.
2) puts more money faster in the hands of creditors or their collection agents.
My bet is that there will always be plenty of people with significant hardships who, whether BK exists or not--is easy or not--want to do the best they can to work something out with creditors.
I'm sure that you, from a CCC background, as I, from a DS background, understand the nature of the client. They aren't deadbeats. Deadbeats are no more going to follow a CCC or DS program than they are going to pay their debts as agreed.
Those who were inclined to just punt and file are still going to find a way to do so, and those who wish to avoid BK at virtually all costs (both CCC and DS clients) are going to continue to do everything they can reasonably do to avoid it.
This whole BK reform has been nothing but politics as usual, which is to say, virtually worthless.
Posted by: Richard Nikoley | April 25, 2005 at 12:17 PM