Tuesday, April 17, 2007

Bankruptcy filings down in 2006

A press release from The U.S. Court site (which is the official site for the United States federal judiciary) says that bankruptcy filings were down for 2006. I was unimpressed with just the comparison with 2005 - that being the year that the 1984 Code came to an end - but the page shows statistics back to 2000.

The release only reports the gross numbers without any explanation of why the decline. I do not think anyone ought to use this information as a premise that the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) has prevented bankruptcy abuse via curtailing frivolous petitions.

My observations from Anderson is a bit different. I stopped my bankruptcy practice and so did some others. I stopped for two reasons: 1) I did not think that the market here would allow for the volume needed to maintain a viable practice at the price level needed for increased work and risks needed to comply with the new law, and 2) I decided that the new bankruptcy law is so anti-lawyer that I did not need the hassle. I believe that there are four attorneys in Anderson who continued practicing under the new law. From conversations with two of them, they do so with a great deal of trepidation at the penalties that might befall them for failing to dot all the i's. I do not miss that kind of stress. My practice has enough of the ordinary stress.

I also think BAPCA's consumer credit counseling and income averaging requirements delay filing a petition. A petition cannot be filed without some sort of consumer counseling. I imagine he detailed financial declarations are not time consuming. I suspect with procedural delays, fewer attorneys doing the work, and more work for the attorneys and clients to do, and higher attorney fees, there should be fewer bankruptcies filed last year.

I doubt it will take a long time to find out if collections attorneys are recovering more funds now than what they did before BAPCA - if meaningful statistics can even be found for that kind of activity. I suppose something similar might be learned from the charge offs made by creditors under BAPCA.

I do not really miss the consumer bankruptcy work. I always had a bias for the creditor side, but I cannot say anything good about BAPCA. From a professional standpoint, it is a poorly drafted law created to protect special interests. I do believe that anyone contemplating filing bankruptcy or practicing bankruptcy law needs to review alternatives to bankruptcy. I have already written about assignments for benefit of creditors. There will be more on these bankruptcy alternatives in the near future.