I feel that the BK laws did need some updating to prevent abuse; however, the changes that were made obviously aren't working. IMO, they were attempting to do three main things with the new laws: (1) try to decrease abuse by high income filers, (2) try to have more people pay at least something to the unsecured creditors, and (3) to stop using the BK system as a legal system to halt foreclosures instead of using other legal means.
The pre-BK credit counseling is not turning more people into payment plans, but it is partly working since emergency filings to prevent foreclosures are down. Seems like a lot of waste of time and effort to me where a large group of people are being "punished" for the actions of a few.
IMO, just get rid of it! When you're filing BK, you don't have extra money to spend and it would be better used by pro se filers to contribute to an hour of legal advice from an attorney. Or to pay for the increased filing fees that went up in April.
Means test. Okay, not totally a bad idea, but still could use some help. First issue, the income is based on the previous six months. With some creative planning, almost anyone can pass by timing their BK appropriately. How about the predicted six month income? Or some combination of previous 3 month and predicted 3 month income?
Still, the majority of filers are filing due to job loss, excessive medical costs (even those with medical insurance), and divorce, these are not the people the new laws were targetting.
Instead, the laws were trying to target high income filers. That's were a stricter means test is needed. How about a separate means test for those who make 2 or 3 times the median income for their state? And/or allow the trustee more scrutiny on expenses for that group. This would focus on the group that has more potential to contain the "abusers" of the system.
Since the majority of Ch 13 BKs fail due to unforeseen circumstances, make savings part of the payment plan. Except, the trustees hold the savings in an account that can only be used with their consent. This would help with emergencies, provide a little nest egg to be turned over upon completion of the plan, and teach an important lesson--savings to prevent future problems.
The pre-BK credit counseling is not turning more people into payment plans, but it is partly working since emergency filings to prevent foreclosures are down. Seems like a lot of waste of time and effort to me where a large group of people are being "punished" for the actions of a few.
IMO, just get rid of it! When you're filing BK, you don't have extra money to spend and it would be better used by pro se filers to contribute to an hour of legal advice from an attorney. Or to pay for the increased filing fees that went up in April.
Means test. Okay, not totally a bad idea, but still could use some help. First issue, the income is based on the previous six months. With some creative planning, almost anyone can pass by timing their BK appropriately. How about the predicted six month income? Or some combination of previous 3 month and predicted 3 month income?
Still, the majority of filers are filing due to job loss, excessive medical costs (even those with medical insurance), and divorce, these are not the people the new laws were targetting.
Instead, the laws were trying to target high income filers. That's were a stricter means test is needed. How about a separate means test for those who make 2 or 3 times the median income for their state? And/or allow the trustee more scrutiny on expenses for that group. This would focus on the group that has more potential to contain the "abusers" of the system.
Since the majority of Ch 13 BKs fail due to unforeseen circumstances, make savings part of the payment plan. Except, the trustees hold the savings in an account that can only be used with their consent. This would help with emergencies, provide a little nest egg to be turned over upon completion of the plan, and teach an important lesson--savings to prevent future problems.
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