Back to pre-2005 Laws anytime soon?

[spearmint]

Any sign of the laws reverting back to those of pre-2005 yet?

[lrprn]

No, not gonna happen. Bk reform isn't anywhere near getting on the congressional radar.

Even if bk reform ever does get any serious attention, there won't be a return to the pre-2005 law. We'll get another "improved" version that will need years of litigation to set case law precedents all over again. No one is anxious to go there but us and the bk lawyers and judges who despite their best efforts couldn't stop the last 2005 "improvement" that created the mess we have now.

[Stl49]

No, not gonna happen. Bk reform isn't anywhere near getting on the congressional radar.

Maybe not, but this is a start in the right direction.

http://www.fastweb.com/financial-aid/articles/2259-congress-proposes-allowing-private-student-loans-to-be-discharged-in-bankruptcy

[lrprn]

Maybe not, but this is a start in the right direction.

http://www.fastweb.com/financial-aid...-in-bankruptcy

Good point! Absolutely agree this change to allow private SLs to be discharged in bankruptcy will finally provide some relief to those with private student loans who file now. The private SL lenders have had a field day since Oct 2005. We've had multiple tales of woe here by filers who are in complete despair because they are literally being held financial hostage to their SLs with no end in sight.

Still don't think we're going to see much else done by Congress to change the 2005 bk law any time soon. Time will tell. Would love to be wrong in this case!

[blessed]

Since bk wasn't even on my radar in 2005, what were the major changes and what makes this system a "mess"?

[lrprn]

Since bk wasn't even on my radar in 2005, what were the major changes and what makes this system a "mess"?

Three big changes with huge impacts on filing starting on Oct 18, 2005, were the adoption of the mandatory Means Test, the requirement that filers must complete pre-filing and post-filing consumer financial education courses, and increases to the timeframes for when you can file a Ch 7 or 13 bk again.

Many bk lawyers and judges did their very best to inject reality into the congressional discussions at the time, but the creditor lobbyists wrote most of the original law and then pushed all kinds of misinformation out about the "high" levels of bk abuse which in reality were the same as they are now - about 2-5% depending on which studies you read. They also pushed out a considerable amount of 'political contributions' to ensure the law would pass - and it did. Creditors thought they would reap a windfall, but other than the auto industry which got the "910 day rule" which was very helpful for them, ironically the other creditors haven't seen anything near the lower rates of bk filings and increased profits they expected to see after the law went into effect.

Here are several excellent online sources that explain the ill-conceived bk law changes that went into effect in 2005 in more detail. This makes for sad reading for all of us who filed after Oct 18, 2005. Most of us would have had an easier time of it if we had filed before the law changed.

http://abiworld.net/bankbill/changes.html

http://www.consumerlaw.org/initiatives/bankruptcy/hr975.shtml

http://www.post-gazette.com/pg/05114/493083.stm

[justbroke]

I don't see us going back to pre-BAPCPA (pre-2005) laws. What we need are some improvements. I think the intent was good, but the implementation is pathetic -- especially allowing the lobbyist from the financial services industry to write the code.

I'd like to see primary mortgage modifications in there. I think student loans, for needy filers, should be in there, but we shouldn't just allow a blind discharge of student loans. In the end, people would just go get $200K to go 6 years to get a law degree... only to discharge it in bankruptcy. I think we just charge too much for higher education. Perhaps solve the problem at the source. But that's me. I'm a root cause type of person.

[Flamingo]

Since bk wasn't even on my radar in 2005, what were the major changes and what makes this system a "mess"?

To be brief and as explained to us by our attorney prior to and during our Plan years, the new law which took effect in October 2005 made it more difficult in several aspects for people to file Chapter 7 and pushed them more toward a Chapter 13; in plain words, if you can afford to pay for your debt, you will. There was apparently a lot of fraud going on pre 2005 in the BK arena with lots of people being able to discharge their debt in Chapter 7 when they could really afford to pay back some of it. It took years after several long delays for that new law to go into effect. There was a huge rush of filings prior to that law going into effect. If anything is done again to revise all that, it will take many, many years.

[blessed]

I don't see that as a mess though, if a debtor can pay then they should pay. Trying to come up with a perfect set of rules for bk when every single case is different is impossible. I wouldn't fault the new laws for that.

Our case was very easy so maybe that's why I don't see the problem.

[JackBondLove]

I don't see a problem with forcing folks who have the ability to pay back debts to do so. If a person has steady income, and if there would be cash after justifiable expenses (which the means test seems to measure), then the filer should be made to pay back the debts over a reasonable period of time - 5 years is certainly reasonable, and after that, the complete discharge. And there should be an easy way to convert that filing to Chapter 7 if there would be ANY change in income.

I guess what I am saying is that the means test should not be the median income, but rather the level of necessary expenses. I suppose though that having the level as median income makes it even nicer to filers.

Oh and BTW, I filed Chapter 7 with ZERO income, so I am not being hypocritical.