WASHINGTON – Area bankruptcy lawyers are getting more phone calls from potential clients who are asking if they should file before more stringent bankruptcy laws go into effect.
The House and Senate have both passed bankruptcy reform bills and are now working out differences in legislation that would make it harder to file for Chapter 7 bankruptcy.
News of the bill’s tougher requirements has some people wondering if they should file now, before the laws change.
“I’ve gotten clients who are very nervous, asking `Should I do it now, should I rush it?'” said Laura Margulies, a Washington bankruptcy lawyer.
Some lawyers said they have seen a dramatic increase in business.
“Right now our cases have increased almost ridiculously, people are rushing to file,” said Charlene Wilson, an attorney from Baltimore.
Wilson said she normally handles six cases a week, but with news of the impending reforms, she has had 20 to 25 cases per week for the last couple of weeks.
Under the Senate’s bankruptcy reform bill, judges would be granted more discretion in deciding whether someone can file, according to the American Bankruptcy Institute.
The ABI said the House version of the bill incorporates a rigid formula that uses income, debt and expenses to determine if someone filing meets a minimum level for Chapter 7.
“The current law is debtor-oriented, debtor forgiving,” said Samuel Gerdano, director of ABI. “The new law, if it passes, will establish a threshold for Chapter 7.”
Worry about those changes has not yet translated into a noticeable increase in filings, however, said workers at the U.S. Bankruptcy Court in Greenbelt.
But Nancy Grigsby, a division manager for the court, said the court does expect an increase in filings if the law passes.
Maryland, which is already one of the busiest districts for bankruptcy cases in the nation, had a 14 percent increase in filings last year.
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