The Effects of The Bankruptcy Law on Filings

2006-08-29

At the beginning of 2006, the new bankruptcy law that was passed in 2005 did not seem to slow down the number of bankruptcies that were being filed. The goal of the bankruptcy law is to make it more difficult for citizens to file for bankruptcy in order to get out of financial trouble. However, it is hoped that citizens will set up repayment schedules, and a number of credit agencies have reported that some consumers are so deep in debt that they are beyond the point of no return when it comes to setting up a payment plan.

A well known credit agency reported that only about 4% their clients were capable of using debt management plans once the bankruptcy law was passed in 2005. Similar results have come from studies that were taken by other debt management companies. When the law first became well known in 2005, the number of bankruptcies soared as consumers attempted to free themselves from debt. Other factors that led to an increase in bankruptcy filings were the rising cost of energy and increased interest rates on loans. In addition to this, a bill was also introduced that will double the amounts that consumers have to pay on their credit cards each month.

The people who support this law have said that it may be too early to determine how effective it is in stopping the number of bankruptcies that have been filed. Some companies have even said that consumers will benefit from the new law, though this has been the subject of debate by some. It is true that those that seek the advice of credit counselors may gain more knowledge when it comes to managing their personal finances. However, some have complained that these laws will simply make things harder for those who are already in debt.

Continue to Part 2 of The Effects of The Bankruptcy Law on Filings

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