LexisNexis Bankruptcy Experts Available for Interview; Editors-in-Chief of Collier on Bankruptcy Explain Changes in Pending Legislation

Business Wire, April 13, 2005

DAYTON, Ohio -- Henry J. Sommer, Esq. and Professor Alan N. Resnick are editors-in-chief of Collier on Bankruptcy, the nation's preeminent treatise in the bankruptcy field. They both are available for comment on consumer and business aspects, respectively, of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Sweeping changes are being made to consumer bankruptcy law, and Sommer is available for comment on the implications for Americans contemplating bankruptcy. Resnick is available regarding business implications; however, the legislation vastly affects consumers.

Some of what's in store six months after the President signs the bill into law (and based on Sommer's expert opinion):

--  It will be more difficult and costly for Americans to file
        bankruptcy due to added and higher expense in the way of
        filing fees, attorney costs, credit counseling, financial
        education courses and higher required payments to creditors.

    --  It is likely 1 percent to 2 percent of people filing for
        Chapter 7 will fail the means test. There are ways to plan to
        help families fare better under the means test, such as timing
        a bankruptcy case to ensure the previous six months of income
        is below state median income.

    --  The means test is being touted as the biggest change; but
        other provisions in the legislation will affect consumers
        more:

        --  Higher fees
        --  Credit and financial counseling requirement
        --  Fewer attorneys in the industry
        --  More paperwork and financial data requirements
        --  New requirements in chapter 13 that will make it far
            harder to propose and complete a repayment plan.

    --  When bankruptcy is being considered:

        --  Consult with a good bankruptcy attorney to help assess the
            situation.
        --  Be wary of financial consolidators who require the home as
            collateral.
        --  Consult an attorney about reputable financial or credit
            counselors instead of seeking one independently.
        --  Be aware of scam artists!

    --  What's the real reason for the new requirement for financial
        and credit counseling? Creditors are hoping for diversion away
        from bankruptcy.

    --  What happens when Chapter 13 doesn't work? (First you pay
        attorneys, followed by domestic support, state welfare
        agencies, trustees, health insurance and then creditors.)
        Creditors continue collection activities, including phone
        calls and wage garnishment, for years to come.

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