Attorneys Have Advice For New Bankruptcy Filers - | Lufkin and Nacogdoches, Texas

10/18/05 - Lufkin

Attorneys Have Advice For New Bankruptcy Filers

by Ramonica R. Jones

There are many reasons people file for bankruptcy, but unpaid medical bills is at the top of the list. Many filers have medical insurance, but co-payments and deductibles can add up. Local bankruptcy attorneys say, even with the new law, these are problems that will always be around.

Bankruptcy attorney Stephen Zayler said, "They tend to run up a lot of the expenses, and they don't have enough money, so they may use credit cards to make up the difference, but it's actually caused by medical problems; and number two is unemployment, number three is divorce."

Under the new law, it will be harder to file a Chapter 7, forcing more people into a Chapter 13 bankruptcy. In a Chapter 7, debtors are entitled to keep a certain amount of property such as their home, retirement, household goods, and automobile.

"If they have any extra property, it's taken and sold by a bankruptcy trustee and the money paid to creditors. In Chapter 13, the debtor proposes a plan to pay back their creditors over a period of time, so it's a repayment plan supervised by the court."

Tougher laws won't stop bankruptcy filings, but attorneys do have advice for new clients.

"They need to hire a competent bankruptcy attorney to represent them. Someone who files bankruptcies only on occasion is not going to be aware of the changes and the new law. And if the debtor does not do what they're required to do under the new law, they can be dismissed, and it can be quite difficult to ever refile again."

Zayler believes the new bankruptcy rules are contradictory and full of flaws. He says it'll take even the most experienced attorney years to figure out how everything is supposed to work.

About eight years ago, the Bankruptcy Review Commission presented a report to Congress leading to the changes. Local attorneys say the result is a law that is slanted to benefit creditors.

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