From Calculated Risk:
In 2005 the so-called “Bankruptcy Abuse Prevention and Consumer Protection Act of 2005” was enacted. Since then the number of bankruptcy filings has increased steadily.
The accompanying chart actually illustrates that, following a spike of personal bankruptcies, presumably in anticipation of the new legislation, the number of personal bankruptcies fell sharply. To my eye when the legislation was enacted the number of personal bankruptcies did decline sharply but that has been followed by steady increases. I’m not sure how to disaggregate time-shifting, reversion to trend, and the economic downturn in this area.
In the months before BAPCPA went into effect, my fellow attorneys who practice bankruptcy law were telling me that they were busier filing new cases than they had been in years. Then, after the law went into effect business fell off apruptly, only to start revising again in 2007 or so when the housing market began to fall off its cliff.
The initial rise, I think, were mostly people who were on the edge of filing and wanted to get in under the old law before the new one went into effect.
Ironically, the law’s purpose — which was to force more people into Chapter 13 bankruptcies where they’d have to pay at least some portion of their unsecured debts off — has largely gone unmet as the economy has resulted in more people qualifying for Chapter 7 liquidation.
I believe it was that same law which exempted derivatives and some other instruments from clawbacks in BK proceedings.
Steve
I can’t imagine that Doug doesn’t have it right.