Consumer Payment Card News

Bankruptcy Crunch

With the possibility that bankruptcy filings could approach or surpass one million this year, the cost of processing the filings will likely soar due the higher work per case required under the the “Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.” The bankruptcy reform laws created new docketing, noticing, and hearing requirements that make addressing the petitions more complex and time-consuming. In addition, each petitioner must certify that he or she has been through credit counseling, a document that did not exist before BAPCPA. The District of Rhode Island Bankruptcy Court recently reported an 87% increase in the ratio of motions to filings, a 104% increase in the ratio of orders to filings; and a 68% increase in the ratio of docketed events to filings since BAPCPA. The Administrative Office of the U.S. Courts says the enactment of BAPCPA came at a time when bankruptcy court staffs were undergoing resizing. After reaching a peak of 5,334 on-board employees in fiscal year 2002, employment in FY 2007 is 4,438, a 17% reduction.

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