New Bankruptcy Law - Targeting the Wrong People?

Last April, President Shrub enthusiastically signed into law the oddly-named Bankruptcy Maltreatment and Consumer Protection Act. This bill, representing the biggest inspection and repair of bankruptcy law in twenty-five years, was written in order to discourage “bankruptcy of convenience.” Proponents of the bill, which included the credit card industry, state that the measure is necessary in order to halt an avalanche of bankruptcy filings by drug users and compulsive shoppers and gamblers. The law do it harder to have got debts wiped away, necessitates credit counseling for those considering bankruptcy, and throws attorneys responsible for paperwork mistakes by their clients in bankruptcy cases. The nett consequence will probably be chaos, as fewer attorneys will manage bankruptcy cases, credit counselors will raise their fees, and more than consumers with problem debt will be clueless as to what they should make next. Adding to the confusion are some new statistics that suggest that a large number of bankruptcies that are thought to be personal are actually business bankruptcies. As a result, the new law may be unfairly targeting consumers for penalty when they are not actually the biggest portion of the problem. Worse, it could be harming small businesses.

Studies suggest that the number of business bankruptcies may actually be up to 10 modern times higher than previously reported. Many small businesses that neglect and register for bankruptcy make so under guidelines that technically sort them as personal bankruptcies. The new law doesn’t account for this, however, and handles such as bankruptcy filers no differently than those who register because they can’t halt shopping. It profits no 1 to coerce a small shop proprietor to experience compulsory credit counseling when their business may have got failed owed to other reasons, such as as having a big-box retail merchant more in adjacent door. Even if that is the case, the law will necessitate the bankrupt business proprietor to attend counseling in order to learn about managing personal and household budgets. This waste materials the clip of both the business proprietor and the credit-counseling agency and denies valuable counseling resources to those people who may really need it.

In time, United States Congress may amend this statute law if certain facets of it make not work as intended. In the meantime, small business proprietors and those with personal debt problems will be inconvenienced, credit counseling agencies will be overworked, and no 1 will be any better off for it.