Don't care if your broke
Bankruptcy filings surge as law looms
Mass. debtors seek protection before complex, costly change
By Robert Gavin, Globe Staff | October 13, 2005
Struggling debtors are rushing to file for bankruptcy before Monday, when a new law that makes it more complex and costly to gain protection from creditors goes into effect.
In the first 11 days of October, more than 2,500 new bankruptcy cases were filed in Massachusetts, compared to 464 during the same period a year ago, according to the clerk's office at US Bankruptcy Court in Boston. More than 1,000 new cases were filed over the long Columbus Day weekend alone.
Bankruptcy Court Clerk James Lynch said he expects the deluge to continue through the weekend. Over the last few weeks, local bankruptcy lawyers say they are filing up to five times as many cases as they normally would.
The new law, passed by Congress and signed by President Bush in April, represents the first major overhaul of the bankruptcy code in more than a quarter-century. Pushed by banks, credit-card companies, and retailers, the changes make it harder for higher-income families -- in Massachusetts, a family of four with income of $85,000 or above -- to wipe out debts through bankruptcy; require debtors to seek credit and financial counseling, for which debtors have to pay; and boost filing fees.