Higher Bankrupt Costs Since the New Law, So How Can Debtors Get Cheap Affordable Bankruptcy Without Lawyers?

WHY THE NEW BANKRUPTCY LAW WAS ENACTED

On
October 18, 2005, the new bankruptcy law, called the “Bankruptcy Abuse
Prevention and Consumer Prevention Act of 2005″ (BAPCPA), went into
effect in the United States. At that time, there was no anticipation
that a rising higher bankruptcy costs would sooner result with the new
law. However, recent reports find that the new law brought such results,
and that there are more American debtors going bankruptcy without
lawyers.

The new law had been prompted principally by the general
clamor and intense outcry and lobbying of the well-financed,
well-organized, and properly connected but powerful, American banking
and credit card industries and the bankruptcy lawyers, who had contended
that the old bankruptcy law was supposedly “too soft on debtors,” and
that the “excessive generosity” of the old bankruptcy system supposedly
encouraged abuse and allowed many undeserving debtors who, they said,
could well have afforded to pay their debts, to take undue advantage by
using Chapter 7 bankruptcy to avoid repaying their debts.

That
claim was NOT at all true. In deed, almost every credible study that had
been conducted on the subject, and most experts that testified before
Congress, had held otherwise. However, Congress disregarded such
evidence. In stead, it promptly responded by passing the BAPCPA law, any
way.

In consequence, the stated and yet unmistakable purpose of
this law was essentially to discourage debtors from filing bankruptcy by
making it more stringent and expensive to file. The new law was to do
that by forcing people who, it was said, could actually “afford”
(through a determination by a complex “means test” calculation) to repay
some of their debts, into filing for bankruptcy under Chapter 13,
instead of under Chapter 7 – that is, the type of bankruptcy (Chapter
13) which requires that the debtor will repay at least some, if not most
or all, of their debts.

HAS THE NEW LAW ATTAINED ITS ORIGINAL OBJECTIVE?

But
lo and behold, today, it is now some 5 years later into the new
bankruptcy law. The actual results and effects of the new law are just
beginning to emerge. And the question is: has the BAPCPA law actually
attained the basic objective for which it had supposedly been originally
designed?

Actually, on one major goal of the law – the goal of
discouraging debtors from filing bankruptcy and drastically curtailing
the rise in bankruptcy filings by debtors – the BAPCPA law has, to date,
turned out to be a woeful failure. In deed, as we speak today, there is
a NEAR RECORD RISE IN BANKRUPTCY FILING. For example, in the 12-month
period ending June 30, 2010, bankruptcy filings rose 20 percent,
according to statistics released by the Administrative Office of the
U.S. Courts. A total of 1,572,597 bankruptcy cases were filed nationwide
in that period, compared to 1,306,315 bankruptcy cases filed in the
previous 12-month period ending June 30, 2009, making it the highest
number of filings for any period since the BAPCPA law went into effect
in October 2005.

How the New Law Has Made Bankruptcy More Cumbersome and Costly for Debtors

It
is, however, on the second major consequence caused by the law, that
its impact has become far more profound for the average debtor or
bankruptcy filer. Namely, on the fact that the new law has made
bankruptcy far more cumbersome for the debtors, and has simply brought
rising higher bankruptcy costs, causing debtors to seek cheap affordable
bankruptcy without lawyer.

Historically, the ability of the
average debtor reasonably to file for bankruptcy and to be reasonably
discharged of his/her debt burden, and to obtain a fresh start to begin
life anew relatively unhindered by the past debts, has been a
fundamental but vital and long-standing part of the American law and
life. In deed, that right is one of a handful of fundamental rights
specifically named by the original U.S. Constitution and guaranteed
under it. However, contrary to that fundamental American value, the new
bankruptcy law of 2005 introduces into the bankruptcy system, perhaps
for the first time ever, elements which drastically limit the extent of
the exercise and enjoyment of this basic right by the average debtor. It
does this by placing an array of new hurdles, financial as well as
legal, on the path of the overburdened American debtor who seeks the
“fresh start” protection that bankruptcy has traditionally offered the
American debtor.

Some Examples of How the New Law Has Done this. The new law: