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For Individuals Contemplating Bankruptcy,
the Rules of the Game Will Change Dramatically on October 17
Friday October 14, 2005 is the last day that individual debtors can file bankruptcy under the existing provisions of the United States Bankruptcy Code. The new amendments, which go into effect on Monday October 17, 2005, will make it much more difficult, expensive, risky, and in some cases simply impossible, for individuals to receive bankruptcy relief.
It is no secret that the amendments were the result of a lobbying effort on the part of the credit card and auto finance industries, which amounted to an all-out assault on the current bankruptcy system, and the debtor relief available under current law. The amendments were opposed by, for all practical purposes, the entire organized bankruptcy world, including judges, professional organizations, and consumer groups.
The new law will include such provisions as “means testing”, which requires any debtor earning above the median income to complete a income and expense calculation which looks quite like a tax return, both in content and length. If this exercise results in the debtor having the perceived ability to make even a minimal payment to creditors over a 5-year period, the case is deemed “abusive”, and is subject to dismissal.
The new amendments create a maze of new forms, procedures, and duties. The failure of the debtor to perform any one of them results in automatic dismissal of the case without a hearing.
It is my considered opinion that persons who are contemplating bankruptcy, or who have serious doubts about whether they can service their current debtor load, should consider filing a case under the existing law. This, of course, is a generality and is not to be construed as legal advice; consult a competent bankruptcy lawyer.
The safety net of bankruptcy is being rendered not-so-safe. Those in financial difficulty wishing to avoid an even worse situation should make an informed decision regarding filing a bankruptcy case before October 17.
David Reeder Chosen to Re-Write a Portion of a Major Bankruptcy Treatise
David Reeder has been chosen to re-write the “debtor’s duties” portion of a major bankruptcy treatise, Norton on Bankruptcy, published by Thompson West. This follows the passage and imminent effectiveness of the amendments to the bankruptcy code. David Reeder’s portion of the treatise will deal with the new and significant duties placed on debtors under the bankruptcy amendments, which become effective October 17, 2005.
Why a Healthy Company Needs a Bankruptcy Lawyer (April, 2003)
Using Creditors Committee to Increase Recoveries in Chapter 11 Cases
The Reederlaw Report
 The Reederlaw Report is published by David M. Reeder and Reeder Law Corporation. Reeder Law Corporation represents all parties to insolvency proceedings, including:
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debtors (both business and individual)
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creditors (both secured and unsecured)
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creditors' committees
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bankruptcy trustees
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businesses and individuals who are sued by bankruptcy trustees
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landlords when the tenant files or threatens to file a bankruptcy case, and
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buyers of assets from bankruptcy estates.
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Visit our website at www.reederlaw.com. The site is continually updated with new articles of interest. Back issues of Reederlaw Report and Trustee Alert are available on the site. Your comments are welcome, since you are the audience, and the content is for your benefit.
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