Bankruptcy Reform 7 years later.
A friend reminded me that October 17 was the anniversary of the effective date of the "Bankruptcy Reform" act. Then-President George W. Bush signed the law earlier, but most parts of the law became effective October 17, 2005.
Some things have changed greatly, some things have not.
Frankly, the changes have been less horrible than many of us (including me) feared.
Bankruptcy has become more complicated, and therefore more expensive. For instance, I now have to gather up paystub information for the prior six-plus months, and complete a form called a means test. Very fortunately, if the result is "under median", we only have to complete two or three of the multi-page form.
Another change has been the requirement to get pre-bankruptcy credit counseling from an approved counseling agency. Because that was relatively unusual back in 2005, we thought that would be a substantial impediment to clients being able to file. However, a whole new industry seems to have grown up to provide credit counseling on-line or by telephone. There are probably at least forty such counseling companies who are approved in Minnesota.
What has not changed is that clients are still in a lot of pain when they come in; what has not changed is that people tend to throw in all their financial reserves in an effort to avoid having to file; what has not changed is that people are very reluctant to file a bankruptcy.
On that "happy" note, I will close this post; however, I add that I am grateful that despite the best efforts of the credit card industry, which lobbied so hard for the 2005 law change, the bankruptcy law still generlaly works so that I can still help people shed their financial "millstone".
