Tags: Debtors | Rush | File | Bankruptcies

Debtors Rush to File Bankruptcies

Friday, 25 May 2001 12:00 AM

Lawyers Weekly USA said bankruptcy filings had the largest increase in history during the first quarter of this year, due primarily to a new law expected to be signed next month by President Bush.

The law would take effect six months after being signed.

"The bankruptcy law that is pending in Congress is the biggest change in 20 years and will make it much harder for debtors," said Tom Harrison, publisher of the Boston legal newspaper.

"People who are in debt are rushing to the courthouse, trying to get their case in before the rules change," he said.

In the first three months of the year, there were nearly 367,000 bankruptcy filings, more than 18 percent more than the previous quarter.

Bankruptcy filings had been declining since June 1998, but the latest figures dramatically reverse that trend, the paper said.

Harrison said lawyers across the country "have been telling us that they're advising their clients to hurry up and go bankrupt." He said experts believe the trend will continue until the law fully takes effect later this year.

"I wouldn't be surprised if there is at least a 50 percent increase," Kent Snyder, a bankruptcy attorney in Portland, Ore., said in Friday's edition.

The newspaper said most consumer bankruptcy cases would be much more complicated, involve much more work and drive most nonspecialists out of the practice.

The sweeping 285-page bill will also make most business reorganizations more difficult, mainly by requiring that businesses provide more information and confirm a reorganization plan more quickly.

The bill, considered to be pro-creditor, pro-consumer or anti-welsher - depending on whom you ask - is "designed to discourage lawyers from taking consumer bankruptcy cases," Corinne Cooper of Tucson, Ariz., a former law professor at the University of Missouri-Kansas City, told the paper.

The changes are "an effort to punish lawyers who file bankruptcy for clients," said St. John's University law professor Ray Warner.

The newspaper said it was told by experts that as a result of all the changes consumer bankruptcy cases will involve much more work.

"The big change is the paperwork," said University of Chicago law professor Douglas Baird. "Consumer lawyers will be drowning in paper."

Copyright 2001 by United Press International.

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Lawyers Weekly USA said bankruptcy filings had the largest increase in history during the first quarter of this year, due primarily to a new law expected to be signed next month by President Bush. The law would take effect six months after being signed. The bankruptcy...
Debtors,Rush,File,Bankruptcies
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2001-00-25
Friday, 25 May 2001 12:00 AM
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