Thinking of Filing for Bankruptcy? - You're Definitely Not Alone

In 2005, Congress changed the Bankruptcy Code with Orwellian-sounding Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). Despite the impressive sounding name, BAPCPA has done little to prevent bankruptcy abuse and has done nothing to protect consumers. It's real purpose was to reduce the number of people filing for bankruptcy by making it more difficult, more costly and by forcing more people into Chapter 13 repayment plans as opposed to Chapter 7. It appeared as if the credit card and banking industries had gotten more than their money's worth from President Bush and the Republican Congress.

Yesterday we "celebrated" the 5-year anniversary of the effective date of BAPCPA. What better way to memorialize the day than to take a look back and see just what effect BAPCPA has had on the number of bankruptcy filings 5 years later.

Every year, an administrative agency known as the Administrative Office of U.S. Courts (AOUSC) is required to issue a report about certain bankruptcy statistics. The statistics for 2009 are available and the numbers are hardly surprising. They reveal the following:

• In 2009, there were 1.4 million consumer bankruptcy cases filed, an increase of 32% over 2008!
• Approximately 71 percent were Chapter 7 cases, and 29 percent were Chapter 13 cases (down from 34% in 2008).
• In 28% of Chapter 13 cases, debtors indicated that they had filed for bankruptcy in the previous eight years
• In 2004 there were 1,597,000 cases filed
• In 2005 there were 2,039,000 cases filed
• In 2006 there were 597,000 cases filed
• In 2007 there were 819,000 cases filed
• In 2008 there were 1,086,000 cases filed
• In 2009 there were 1,400,000 cases filed

So what do these numbers mean? Obviously, there were the most filings in 2005 due to the fact that many people rushed to file their case before the law changed. But if we could chart these numbers on a graph, we would see that the number of cases filed last year is just below the number filed the year BEFORE the law changed. Based on the trend and the continued condition of the economy, it's easy to see that the number of filings for 2010 should surpass the number of filing in 2004. In short, BAPCPA temporarily reduced the number of filings, but five years later, we're already back to the pre-BAPCPA level.

But hasn't BAPCPA reduced the number of people filing for Chapter 7 and pushed them into Chapter 13 plans? After all, that was one of its goals. A closer look at the numbers shows that in 2004, the percentage of consumer bankruptcy cases that were filed under Chapter 7 amounted to (drum roll please) . . . 71%! Exactly the same percentage as in 2009. So five years down the road, BAPCPA has neither reduced the number of people filing for bankruptcy, nor has it changed the percentage filing for Chapter 13.

Is there a lesson to be learned? Essentially, we find ourselves in the same position that we were in before the law changed. Of course, now there are additional burdens, cost and expense for debtors, their attorneys, trustees, creditors and the courts. To what end? A Congress and President who knew little if anything about bankruptcy pushed through a measure that has made the process a hassle for everybody, including the very banks and credit card companies that paid them for it. Based on the results five years later, maybe they should ask for a refund.

Filing bankruptcy can be complicated and confusing. For more information on Chapter 7 and Chapter 13, or for a free consultation, call me at 330-605-3508 or visit my website at http://www.ohiobankruptcyrelief.com/.

Bankruptcy Fraud - Just How Much Trouble Can You Get In By Lying?

The following is a common situation that needs to be addressed. Often, people will come into my office to talk about bankruptcy and discuss their options. During the course of our conversation, we talk about their assets. Sometimes, I unfortunately have to tell people that they may lose property if they file a Chapter 7 bankruptcy, or pay money to the trustee. Although many people understand this, others get upset. They may talk about transferring property or just not disclosing it on their petition. Of course, I have to advise them that I will not file their petition if I know that we have not disclosed all of their assets or transfers. I often wonder how many of those people then go to visit another attorney and do not tell them about their assets. If you're thinking about hiding assets during your bankruptcy, you need to think twice.

First things first. BANKRUPTCY FRAUD IS A CRIME. According to some sources, nearly 70% of all bankruptcy fraud involves the concealment of assets. You need to know that when you sign your bankruptcy petition, you are signing it under penalty of perjury.

Under federal law "A person who - (3) knowingly and fraudulently makes a false declaration, certificate, verification, or statement under penalty of perjury as permitted under section 1746 of title 28, in or in relation to any case under title 11 (The Bankruptcy Code) shall be fined under this title, imprisoned not more than 5 years, or both." 18 USC 152. The maximum fine is $250,000. This should impress upon you the consequences of intentionally lying on your bankruptcy petition or attempting to conceal assets.

Furthermore, when you sign your petition, it states that "I declare under penalty of perjury that the information provided in this petition is true and correct". Also, when you attend the Meeting of Creditors, your bankruptcy trustee will swear you in. The point is that this is serious stuff people.

Other consequences of lying during your bankruptcy could include: having your discharge denied or revoked. You may also be forced to surrender property to your bankruptcy trustee.

Finally, you need to know that going back and fixing your schedules or disclosing assets does not relieve you of liability for lying in the first place.

If you're concerned about losing property through a bankruptcy, talk to an experienced bankruptcy attorney about the possibility of filing a Chapter 13 bankruptcy. In a Chapter 13, you can keep all of your property, although you will pay the value of your non-exempt property through your Chapter 13 case.

For more information on Chapter 7 and Chapter 13, visit my website at http://www.ohiobankruptcyrelief.com/.