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Just a few years ago, the Federal bankruptcy laws were reformed. Many people consider this a result of the lobbying power of the credit industry. With the recent revelations of abusive practices on the part of credit companies, from credit cards providers to mortgage companies, it’s hard to deny this claim. To add credibility to this claim, who else but the credit industry would stand to gain from changing these laws. Lucky for today’s debtor, total bankruptcy is there to help.
The intent was sold as a way to prevent consumers from abusing the laws. The credit industry claimed that consumers simply ran up their credit bills knowing that bankruptcy was an easy way out. They backed this up by reporting that many people filed bankruptcy again and again. Of course, they took no responsibility for handing out new credit cards to people who were barely out of bankruptcy time and time again. Because no one can file again for at least seven years, the credit card companies seemed to consider this a strategy. Offer the cards at high rates knowing that they would be paid for at least that amount of time.
What exactly changed when the new laws were put into place? For one, anyone who would like to file bankruptcy must attend credit counseling first. Because most people file bankruptcy because of job loss or high medical laws, this just didn’t make sense. It did, however, delay the case and allow the credit companies to extend their collection efforts for awhile longer. Another major change is that bankruptcy attorneys must now verify some of the claims that the debtor makes instead of relying on their word. What ever happened to the trust between a lawyer and his client? The net effect of this change is that the legal fees required to file have skyrocketed since the reform was completed.
