Jew World Order

This year, hundreds of thousands of Americans are expected to be too broke to file for bankruptcy. ~ Blake Ellis

The average cost to file for Chapter 7 bankruptcy protection, the most
common form of consumer bankruptcy, is more than $1,500, according to
recent research submitted to the National Bureau of Economic Research.

As a result, anywhere between 200,000 and one million consumers are estimated to be unable to afford that steep cost this year.

The research, conducted by a group of professors from Columbia
University, the University of Chicago and Washington University in St.
Louis, examined how bankruptcy filings spiked after people received
their tax rebates in previous years.

They estimate that another 200,000
consumers, who would otherwise not have enough money to file, will use
their tax refunds to pay for bankruptcy this year.

“For lots of people, bankruptcy has been taken off the table as an
option because of the severe fees involved,” said Jialan Wang, co-author
of the report.

Among those fees is a charge of about $300 just for filing the paperwork
with the federal court, while the rest typically goes to bankruptcy
lawyers, said Wang.

And there are other expenses on top of that, including fees for
mandatory pre-bankruptcy credit counseling and a pre-discharge debtor
education course. These average about $85 altogether, according to a
recent study sponsored by the American Bankruptcy Institute.

That means many of the Americans who have seen their debt snowball out
of control due to events like job loss, foreclosure or a medical
emergency during the economic downturn are now left without their last
financial lifeline, she said.

“It becomes harder and harder to pay off the debt as interest payments
get higher, so your debt grows larger and larger,” she said.

Extreme debtors

The cost of filing for bankruptcy has risen in recent years as a result
of the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act,
which aimed to reduce the number of bankruptcies taking place by adding
more requirements to the filing process – including additional paperwork
and the credit counseling and debtor education.

While
the bankruptcy rate has fallen slightly since the law took effect –
from a rate of 1.4% in 2004 to 1.3% last year – the average income of
bankruptcy filers has increased, the NBER study found. The findings
indicate that the new requirements are pricing out many of the consumers
who are least able to afford the fees, said Wang.

“It ends up being the relatively better off, or middle-class consumers
who can actually afford to file, and the people with lower incomes can’t
afford to file,” said Wang.

Billy Brewer, president of the National Association of Consumer
Bankruptcy Attorneys, said bankruptcy attorneys have no choice but to
charge such high fees.

“When clients come in and I tell them the fee, they look at me like I
have two heads, and say: What part of ‘I’m filing for bankruptcy don’t
you understand?’ But we can’t afford to do it for free,” said Brewer,
who charges an average fee of $1,500. “Congress decided to make the
process much more difficult and there’s much more paperwork involved, so
attorneys are spending double the time they used to just to help
someone file.”

Those who can’t afford the fees should still try to find a pro bono
lawyer willing to provide legal services for free, said Wang. However,
only a small fraction of people are actually able to get this kind of
help.

And think twice before you decide to go it alone, said Gerri Detweiler, director of consumer education for Credit.com.

“It’s too complicated now, and too much of a minefield. Make a mistake
and your case is dismissed,” she said. “A dismissed bankruptcy hurts
your credit just as badly as one you complete. So you have all the
downside without the fresh start.”

She
also warns against low-cost document preparation services claiming to
help consumers fill out necessary documents. It’s easy for consumers to
think they’re getting sound legal advice even though the preparers
aren’t lawyers, she said.

Ditching debt

Among the various types of bankruptcy protection, Chapter 7 is the most
common. Chapter 7 enables you to wipe out some or all of your debt in
the shortest amount of time, said Detweiler. Bankruptcy doesn’t relieve
you of certain debts, however, like student loans or alimony payments.

If you’re filing Chapter 7 bankruptcy, you can request to have the $300
court fee waived. The judge will typically grant a waiver if your income
is less than 150% of the poverty line and you can prove that you are
unable to pay the fee in full or in installments.

However, it’s the attorney fees that are the biggest expense.

$34,000 in debt, wants to start a business

If you have been making some payments on your debts, an attorney may
advise you to stop paying creditors, which can free up the money you
need to pay the attorney’s fees.

But if you haven’t had enough money to make any payments to creditors,
Detweiler recommends asking friends or family members for help. If that
doesn’t work, you could sell some of your belongings or get a second
job, as long as your attorney says that it wouldn’t affect your ability
to receive bankruptcy protection.

Brewer, of the National Association of Consumer Bankruptcy Attorneys,
said sometimes it’s just a matter of rearranging priorities.

“If the need is crucial enough, consumers usually find a way to come up with the money,” he said.

Blake Ellis – May 7, 2012 – posted at SignsOfTheTimes

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