A new report claims that recent
revisions in the federal bankruptcy laws have made bankruptcy more
costly and complicated-worsening situations for consumers who are
facing financial crises.
The National Association of Consumer Bankruptcy Attorneys (NACBA) also says its study failed to uncover the "deadbeats" and abusers of the bankruptcy system, who were cited by reform proponents as justification for the tougher filing standards.
"Instead, they have put new hurdles in the path of people who are already flat on their back due to financial crises over which they have no control, such as the loss of a job, catastrophic health care bills, and so on," says NACBA Executive Director Brad Botes.
The study found that of 61,355 consumers seen by six credit counseling firms surveyed, 97% were unable to repay any debts. About four in five of the would-be bankruptcy filers were forced into dire financial straits by circumstances beyond their control.
The new bankruptcy law requires potential bankruptcy filers to seek credit counseling as a first step in the filing process.
"The credit counseling requirement under the new law, designed to steer debtors who could repay their debts into a debt management plan, simply imposes new costs and time burdens on individuals who can ill afford either," the report states.