On Monday, we looked at the Insolvency Epidemic — so its not like no one saw this coming.
Everyone knew that yesterday was going to be the "Day of Last Resort" — but even still, this headlong rush is pretty astonishing:
"When the new regulations go into effect on Monday, they will introduce sweeping changes intended to make it more difficult for consumers to erase their debts. They will also increase the costs of filing for bankruptcy, adding new steps like credit counseling and more paperwork to the process. The new law, which was passed by Congress six months ago, will also require a thorough review of whether people can pay off at least some of their credit card bills and other debts.
In anticipation, there has been a rising stream of bankruptcy filings in the past several months. That has turned into a scramble in the last couple of weeks.
But at federal courthouses across the country yesterday, the sheer numbers were more than anybody in the court system could recall.
"We have never seen anything like this," said Barbara J. May, a consumer bankruptcy lawyer in St. Paul. "We knew it would be an upswing, but this is pandemonium."
Bankruptcy lawyers across the country reported scores of last-minute phone calls from anxious debtors wanting to schedule an appointment; one out-of-state client even bought a first-class airline ticket just so he could meet with an adviser.
Court clerks around the country reported that thousands of consumers had filed their bankruptcy petition electronically. But thousands more filed their paperwork in person, prompting many bankruptcy courts to use vacant courtrooms, bakery ticket numbers and extra staff members. The flood of filings is expected to continue until midnight Sunday because the judges are allowing electronic filings and some courthouses have put out drop boxes." (emphasis added)
That’s the lawyer’s word, not mine. And Friday, originally thought to be the "Day of Last Resort" has been extended throughout the weekend:
"Many consumer bankruptcy lawyers will be working through the
weekend. "I have 75 cases that I have to file before I can go home
today," said Ms. May, who has employed five additional paralegals and
her 79-year-old mother to handle the flood of phone calls. "I will be
here until midnight on Sunday and people are still calling to get
In many cases, consumers trying to get their bankruptcy petitions in
under the wire had been contemplating the decision for a long while.
The deadline, however, led them to act."
The chart suggests that this will not play too well in Peoria . . .
graphic courtesy NYT
UPDATE October 16, 2005 10:49 am
You can see highlights of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 at Mike Shedlock’s, along with a good analysis, and excerpts from a WaPo article on the smae subject . . .
Debtors Throng to Bankruptcy as Clock Ticks
NYT, October 15, 2005