Oct. 19, 2005 – In advance of Mondayâ€™s activation of a sweeping new law imposing fresh restrictions and requirements on those seeking protection from debilitating debt, an unprecedented stampede of people turned out to file bankruptcy petitions before the October 17 deadline. Bankruptcy courts across the nation added staff, extended hours and relied heavily on electronic filings to deal with the onslaught.
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Several groups that track financial and consumer interests have been closely watching the continuing rise in personal bankruptcy filings since Congress passed the Bankruptcy Abuse and Consumer Protection Act and signed it into law early this spring. Consumer advocates say the lawâ€™s name is a misnomer and charge that credit counseling requirements and tighter court controls are likely to cause more harm to consumers while padding the pockets of the wealth-heavy credit industry.
Early counts of bankruptcy filings showed a marked increase over the numbers from a year ago. According to the most recent US Bankruptcy Court statistics released in June, 467,333 people filed for protection in the second quarter this year, up over 46,000 from the same period the previous year.
Since then, reports from across the country point to an even greater rise in people seeking bankruptcy protection under the older laws.
In the two weeks leading up to the deadline, over 15,000 people filed for protection under the old rules in New Jersey alone, the Star Ledger reported. The office stayed open throughout the weekend and allowed online filings through 11:59 pm Sunday.
Chicago bankruptcy court officials reported receiving 10,000 filings in the past week, ten times the normal number and double the courtâ€™s largest month ever, the Chicago Sun-Times said.
Saturday, the Seattle Post Intelligencer reported a boom in filings in Washington State's federal bankruptcy courts as well. Around 1,300 people filed at the Seattle court by 2 p.m. Friday alone, the paper said.
Lundquist Consulting, a California-based company that has been collecting statistics on bankruptcy filings, expects the final tally for last weekâ€™s applications to top 200,000, the Associated Press reports. A record 102,863 people filed the week before, and the recent rise in activity is likely to put total bankruptcy claims over 1.62 million for the year, the firm said.