Bankruptcy filing numbers spurting

first_img160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set! AD Quality Auto 360p 720p 1080p Top articles1/5READ MOREWalnut’s Malik Khouzam voted Southern California Boys Athlete of the Week Filers also will be required to get professional credit counseling with 180 days of filing. Victims of Hurricane Katrina forced into bankruptcy will be given leeway with regard to the credit counseling and income requirements. How much leeway a filer receives is up to individual bankruptcy trustees, the Justice Department officials tasked with overseeing bankruptcy filings. The law also provides special accommodations for active-duty members of the military, low-income veterans and people with severe medical disabilities. For high-income bankruptcy filers, the new law will supersede “homestead exemptions” in a handful of states that allowed wealthy people to file for bankruptcy while keeping their homes. The law limits the home exemption to $125,000 if the filer bought his residence less than three years and four months before filing, preventing wealthy people from pouring money into an expensive mansion just prior to declaring bankruptcy. The law also makes it harder for businesses in bankruptcy court. A major change is a greater limit on what’s known as the exclusivity period, the span during which a company has the sole right to propose a reorganization plan. Another change will restrict the big pay packages now routinely awarded to top employees in bankruptcy. NEW YORK – The number of personal bankruptcy filings is soaring as the effective date nears for a new law making it harder for consumers to seek protection from debtors. According to Lundquist Consulting, which tallies weekly bankruptcy statistics, 102,863 bankruptcy filings were received in U.S. courts last week – more than 20,000 per day, on average. The number of filings has climbed 19.4 percent year-to-date, to 1.47 million compared with 1.23 million during the same period in 2004. A smaller surge was seen when President George W. Bush signed the bankruptcy overhaul into law April 20. The law is due to take effect Monday, and Lundquist Consulting, a Burlingame, Calif.-based financial research firm, said it expects the number of bankruptcy filings to remain high this week. After Monday, the requirements for bankruptcy protection become much more stringent. People with above-average income, as determined by a standard “means test,” will be barred from filing for Chapter 7 protection, under which debts can be wiped out entirely. Instead, they will have to file more restrictive Chapter 13 bankruptcies, which require a five-year repayment plan. last_img

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