LexisNexis Bankruptcy Expert: What Next?; Editor-in-Chief of Collier on Bankruptcy Projects on New Legislation

Business Wire, April 19, 2005

DAYTON, Ohio -- Henry J. Sommer, Esq. is editor-in-chief of Collier on Bankruptcy, the nation's preeminent treatise in the bankruptcy field. With President Bush expected to sign the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 this week and make it law, Sommer is available for comment about the law's implications and what to expect when it takes effect in six months. Sommer projects:

--The means test is not really the news. Because there are ways to plan, people can time a bankruptcy so they fall under Chapter 7 requirements. Perhaps only 1 percent to 2 percent of people filing for Chapter 7 will fail the bill's means test.

--Credit and financial counseling could be the biggest challenge of this legislation and cause the most concern:

--The Justice Department is to accredit/approve financial and credit counseling companies and providers of the required education course.

--This area of industry has been fraught with fraudulent behavior and only reluctantly has the government begun to recently crack down.

--Creditors are hoping consumers are diverted from filing bankruptcy once they have experienced financial and credit counseling.

--Sommer believes many people filing bankruptcy do not need this counseling. The counseling could not have prevented them from losing a job or having medical problems.

--Attorneys will think twice about practicing bankruptcy law because of:

--More paperwork and financial data requirements

--Special requirements for bankruptcy attorneys that could trip up general practitioners

--Will the bill really work?

--There may be higher incidence of people suffering from depression and anxiety as a result of the new legislation, says Sommer, looking ahead.

--More people will be diverted from filing bankruptcy at all, and creditors will resume constant collections activity (phone calls, emails and wage garnishment).

--Creditors can get in queue - after payments to attorneys, domestic support, state welfare agencies, federal trustees and health insurance premiums.

--When considering bankruptcy:

--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!

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