In 2005, Congress made significant changes to the bankruptcy code, which were designed to make it more difficult for consumers to get debt relief. These new standards made bankruptcy law more complicated and challenging for consumers and the attorneys who assist them. After this law was passed, consumer bankruptcy lawyers noticed that they had to spend much more time on each case, in order to help their clients comply with all of the new requirements. A recent study now confirms what consumer bankruptcy attorneys in Orlando have known for quite some time – the 2005 changes to the bankruptcy laws have increased the cost of seeking bankruptcy protection.
The study, which was funded by the American Bankruptcy Institute and the National Conference of Bankruptcy Judges, examined consumer bankruptcy cases filed in Florida, Illinois, Georgia, Maine, Utah and West Virginia. The costs to consumers was defined as debtor’s attorneys fees and expenses, trustee fees and expenses, filings fees, credit counseling and debtor education fees and any other professional fees. The study compared these costs during the period of 2003 to 2004 before the change in the law, to the period of 2007 and 2008. The study found that for Chapter 13 bankruptcy cases, the median cost for consumers increased from $2,930 to $4,077. For Chapter 7 bankruptcy filers, the costs increased from $900.00 to $1,399.
Despite these more stringent standards, and the increased cost of seeking bankruptcy protection, the number of bankruptcy filings has increased every year in Orlando and throughout the United States since the law was passed.