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The clock will start ticking today as President Bush puts his John Hancock on the bankruptcy reform bill recently passed by Congress. The new legislation will take effect in October. Most observers believe the new law will create a mad dash to the courthouse to escape the impact of the new requirements. The new law will require bankrupt debtors who have some ability to repay part of their debts to file a Chapter 13 petition rather than a Chapter 7 petition. Consumers with income above their state’s median income who can pay at least $6,000 over five years will be required to enter into Chapter 13. During 2004, bankruptcy ran nearly 4% below 2003 levels and has dropped significantly in January and February of this year. The decline for full-year 2004 is the first drop in consumer bankruptcy filings since full-year 2000. Congress debated bankruptcy reform legislation for eight years.

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