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Pending bill could boost personal bankruptcies
By Gannett News Service

WASHINGTON — April 10, 2005 - Bankruptcy attorneys will soon flood the television airwaves urging people to file for bankruptcy protection, predicts one consumer advocate.

The reason: a sweeping overhaul of the rules governing personal bankruptcies, which will make it harder for individuals to walk away from their debts, is expected to take effect in October.

After eight years of roadblocks, impasses and a veto by President Clinton in 2000, legislation sought by the credit card industry and opposed by consumer groups is expected to become law later this month.

The House is expected to vote next week on a Senate-passed bill that can be sent directly to President Bush for his signature.

Because the law won't take effect until 180 days after Bush signs it, Kathryn Crumpton, manager of Consumer Credit Counseling Service of greater Milwaukee, said she's worried.

"Part of me is concerned we'll see an awful lot of attorneys on TV saying, 'Hurry up and file before the new law takes effect,' " said Crumpton. "And then we'll have this big rush of bankruptcy filings."

Business groups that have lobbied for the bill are eager for it to become law.

"The bill is way, way overdue," said Mallory Duncan, senior vice president and general counsel of the National Retail Federation. "Bankruptcies are continuing to skyrocket."

About 1.6 million Americans filed for bankruptcy protection last year, about double the number who did a decade earlier.

Most bankruptcies involve people who have high medical bills, have gone through a divorce or have lost their job.

Susan Morley of Manitowoc, Wis., who filed for bankruptcy protection in 2002, said she did it because her situation was worsening with a collection agency pursuing an $8,000 medical bill that originally was $3,000. Morley's ex-husband had agreed to pay the bill as part of their divorce in 2000, but he moved to another state and she became liable for the payment.

"You can never get out of debt when it comes to a collection agency," said Morley, who was laid off from her job several months after emerging from bankruptcy. She's now collecting unemployment checks of $270 a week, attending classes to become a certified medical assistant and hoping to begin paying off a recent hospital bill of $2,000 when she gets a job.

Many filers still will be able to walk away from their debts under Chapter 7 of the bankruptcy code as long as they are willing to liquidate all but a few key possessions.

However, more will be forced into Chapter 13 where debtors must repay part of their debts in exchange for keeping a house, a recently purchased vehicle and other household property.

Consumer advocates warn that some debtors will be denied eligibility for bankruptcy protection and be unable to discharge their debts under the new law.

"In some instances they won't be able to declare bankruptcy," said Gerald Thain, a law professor at the Economic Justice Institute in Madison, Wis.

The new law will require an initial review by a credit counselor who may recommend against a U.S. Bankruptcy Court proceeding and instead advise a repayment plan.

South Africans 'handle debt better'

Johannesburg - May 16 2005 - A 3.8 percent drop in civil judgments for bad debts shows that South Africans have become more responsible in managing their debts, said the Consumer Profile Bureau on Monday.

Statistics SA recently released figures showing that civil judgments for bad debts declined from R632m in October 2004 to R511m in November 2004. Civil judgments for bad debt stood at R840m in December 2003.

A recent study also showed that consumers had reduced their outstanding debts by five percent in the last 24 months.

"We believe the main reason for the positive trends we are seeing now is that consumers are becoming more aware that responsible debt management is in their best interest as it gives them access to credit that can improve their lives," said bureau managing director Fred Steffers.

Constant reduction in the interest rate, a good Consumer Price Index and consumer confidence in the economy were factors contributing towards the positive trend.

The interest rate was at 10.50 percent and CPI for March was three percent. But low inflation and cheaper imports courtesy of a stronger rand might halt progress made so far, Steffer warned.

"We are seeing historically low prices for a wide range of imported electrical and electronic goods, ranging from microwave ovens to music centres and TVs."

However, Steffer said, South Africans who maintained control of their credit extensions would benefit well into 2006.

Robber hits credit union

May. 20, 2005 - Tempe's recent rash of bank robberies continued Thursday at about 11 a.m. when a man robbed the Arizona Central Credit Union at Price and Southern roads.

A man in his 40s took an undisclosed amount of money. Police said the robber was about 5-foot-9, 160 pounds, White, with a mustache. He wore a white shirt, jeans and sunglasses, witnesses said.

The suspect fled on foot, and Tempe Police and the Federal Bureau of Investigation are investigating. It's unclear if the robbery is connected to about a dozen others in the last three weeks. Anyone with information can call police at (480) 350-8311.

- Katie Nelson