Bankruptcy Filings Soar In Advance of New Law
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Two weeks before a new, more restrictive national bankruptcy law goes into effect, financially strapped Americans are rushing to file for protection from their creditors, with filings climbing to an unprecedented average of 13,000 a day last week. Week after week records are toppled. Last week’s 68,287 filings surpassed the record set the week before by 24 percent, and this week’s total is likely to be higher, according to data released yesterday by Lundquist Consulting Inc., a financial research firm. Daily filings averaged 10,367 in September, compared with an average of 6,079 in September 2004. The surge is in anticipation of the new bankruptcy law, long sought by the financial industry, which takes effect Oct. 17. The law will make it harder and more expensive for people to completely wipe out their debts under Chapter 7 bankruptcy. “We are seeing a rush, mainly from people we saw a year ago,” Northern Virginia bankruptcy lawyer Robert Weed said. A year ago his clients thought they would be able to work their way out of debt without filing for bankruptcy, he said, “but now they’re in a panic to get in before the law is changed.” That is what prompted Samantha Gordon, 28, of Woodbridge to file. “I was putting it off and putting it off,” the single mother of three said. Gordon, a patient-care coordinator, said she kept hoping to pay off her debts, but every time she had thought she was close, “a new bill, mostly medical, came up.” She decided to take action after her father alerted her about the new law. In the Washington area, many lawyers report major increases in bankruptcy clients over the past month. Some are so busy they have stopped accepting new clients. Weed’s three Northern Virginia offices, for example, stopped taking new clients in mid-September, except in an emergency, such as someone whose wages were about to be garnished. |