My colleague, New York Bankruptcy attorney Jay Fleischman reports on his New York Bankruptcy and Consumer Law blog that bankruptcy filings are beginning to rise. Jay notes the following factor as reasons for the increase:
- relaxed credit underwriting standards by lenders in every range of the risk spectrum
- interest rates with no caps – such as 30% penalty interest rates on credit cards
- a growing number of uninsured debtors who have to file bankruptcy to resolve unpaid medical expenses
- increasing gasoline prices
My call rate has been increasing because of these factors and a few more, including
- the doubling of minimum credit card minimum payments
- the post-Christmas, post-tax refund effect – many people are still carrying credit card balances from Christmas and they have used up their income tax refunds
- mortgage delinquencies caused by upward adjustments of adjustable rate or interest only mortgages
- the end of the October 17 lull – prior to October 17, thousands of debors who otherwise might have waited a few months to file took advantage of the old law. Now, enough time has passed that people who were not previously in trouble are in trouble
As expected, the new bankruptcy law has not and will not reduce the need for honest, hardworking debtors to file bankruptcy. The same problems that existed for debtors prior to October 17, 2005 still exist in 2006.