Massive drop in US bankruptcies
New law cited as key reason for drop
Personal bankruptcies in the US have fallen by a massive 71% one year after
the adoption of the Bankruptcy Abuse Prevention and Consumer Protection Act of
2005.
Research provider LexisNexis found that Chapter 7 bankruptcy filings were 71%
lower than over the same period for 2004.
In 2006 from 1 January to 15 September, there were 237,578 filings, compared
with 830,014 for the same period in 2004.
The Act gives the US Trustee Program new responsibilities in a number of
areas, including: implementing a new means test’ to determine whether a debtor
is eligible for chapter 7 (liquidation) or must file under chapter 13
(wage-earner repayment plan); supervising random audits and targeted audits, and
certifying entities to provide the credit counseling that an individual must
receive before filing bankruptcy.
LexisNexis said though that a number or factors would continue to impact on
the rate of personal bankruptcies including such things as higher mortgage
rates, rising interest rates, increasing unemployment levels and higher energy
prices.