A Rush to Beat Bankruptcy Deadline
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Normally sleepy bankruptcy court clerk offices around the region and the country yesterday overflowed with filers beating the deadline before tougher new bankruptcy rules take effect Monday. In most instances, 4 p.m. yesterday was the last time that those filing paper claims, most of whom were seeking bankruptcy protection without lawyers, could do so. Over the weekend, bankruptcy courts will continue to accept filings over the Internet from lawyers with access to the court electronic case-filing system. Paper filers in Maryland may file over the weekend at a drop box at the federal building in Baltimore. At the U.S. Bankruptcy Court clerk’s office in Alexandria yesterday, 420 cases — all of them personal bankruptcies — were filed as of 5:30 p.m. But most were electronically filed. Charles Miller, division manager of the Alexandria court clerk’s office, said the office handled 47 paper filers yesterday, much more than usual but nothing the clerk’s staff couldn’t handle. Before bankruptcy filings began to surge last month, the Alexandria court rarely saw more than 10 filings in a day. Similar increases were reported at the bankruptcy courts in the District and Maryland. “We were surprised by how well prepared the filers were in general,” Miller said. “They had done their homework. They just waited until the last minute.” The line of filers stretched out of the clerk’s office waiting room in the late afternoon. “It was wild . . . at least wild for us,” Miller said. The rush to file under existing bankruptcy rules was caused by passage this year of the Bankruptcy Abuse Prevention and Consumer Protection Act , which takes effect at midnight Sunday night. The law, long pushed by banks and consumer lending companies, is the most extensive change in the U.S. bankruptcy code in decades. It makes it harder for individual filers to erase debts by, among other things, requiring filers to go through credit counseling. Higher-income filers in many cases will be forced into Chapter 13 bankruptcies, which require repayment of a least a portion of debt. Consumer advocates said the changes will unnecessarily harm people under unexpected financial stress, such as costly illnesses, and generally make bankruptcy more expensive and bureaucratic. |