New laws put damper on bankruptcy filings:
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A year after sweeping reform brought filings to a near-standstill, people are beginning to seek bankruptcy protection once again. Changes to bankruptcy laws implemented Oct. 17, 2005, were meant to curb abuses of the system by shepherding more fliers away from Chapter 7 and through Chapter 13, which requires consumers to repay at least some debt. The stricter regulations tightened income guidelines, raised filing fees and made the process more complicated. Reaction to the law was stunning–at least initially. In fact, more people filed nationally for bankruptcy in the first two weeks of October last year–right before the deadline–than have filed in all of 2006. All told, a record 2 million Americans sought bankruptcy protection last year, including nearly 79,000 Hoosiers. The rush to beat the Oct. 17 deadline last year left many bankruptcy lawyers with few clients in the following months. Consumer bankruptcies plummeted to 1,167 in the first quarter of 2006 in the Southern District of Indiana, which encompasses Indianapolis, Evansville, New Albany and Tel-re Haute. But filings are back on the rise. Third-quarter numbers tripled to 3,511. “Clearly, there was a drop-off,” said Gary Hostetler, a partner at the Indianapolis firm of… |