Debtors race the clock: Bankruptcy cases are up as October date nears

[rainbow4321]

http://www.dallasnews.com/sharedcontent/dws/bus/stories/080705dnbusbankruptcy.228bf0f9.html

With about 10 weeks to go until tougher personal bankruptcy laws go into effect, North Texas is experiencing a modest summer surge in cases being filed.


Bankruptcy filings for the Northern District of Texas peaked at 3,172 in April, the month President Bush signed the law that is intended to force more debtors to pay back at least some of their debts, and they have stayed high since. Local lawyers and court officials predict the surge will persist through Oct. 17, when the law takes effect.

The biggest change, say court officials and lawyers involved in bankruptcy cases in North Texas, is the law's new income test.

The test determines which filers have to move from Chapter 7, where almost all debts are forgiven, to Chapter 13, where some or all debts are repaid over time. Before the law was passed, industry experts were calculating that a small proportion – maybe 10 percent – would be denied Chapter 7 and moved into Chapter 13. Now they are predicting a much smaller number, closer to between 2 percent and 5 percent.