Kansas bankruptcy court marks record as new law kicks in

Topeka Capital-Journal, The, Oct 18, 2005 by Barbara Hollingsworth Capital-Journal

A record 1,700 Kansans filed for bankruptcy Friday --- getting their paperwork in before stricter bankruptcy laws went into effect Monday.

The record day amounted to 10 percent of the bankruptcy filings made during all of the past year, said Fred Jamison, clerk of the U.S. Bankruptcy Court for the District of Kansas.

"We've seen a substantial increase the last six months since the new bill passed, and of course the last two weeks have been the biggest rise overall," said Jamison, who is based in Wichita.

Sweeping changes to bankruptcy law, which were signed by President Bush on April 20, drove the last-minute rush. From July 1 through Sunday, more than 13,000 bankruptcy cases were filed in Kansas --- compared to about 16,300 between July 1, 2004, and June 30, 2005, Jamison said.

Topeka bankruptcy lawyer Mike Brunton stopped taking new clients Wednesday to avoid becoming overwhelmed. Calls from those seeking to file for bankruptcy continued Friday.

"We couldn't even answer the phone," Brunton said. "It was just ring after ring after ring."

Some filed without an attorney. In Wichita, Jamison said 190 people filed on their own behalf during the busy day Friday.

"Unfortunately if some of those folks waited until the last minute to seek out an experienced bankruptcy attorney, they were probably out of luck," he said.

Topeka's Housing and Credit Counseling Inc., which is approved to provide required education and counseling called for under the new law, began meeting with clients even before the new law went into effect, said Marilyn Stanley, director of education and community relations for the organization.

"Attorneys were the ones who referred them, so they must have been too busy," she said.

In addition to requiring counseling, the law prohibits most people with above-average income from a Chapter 7 bankruptcy, which eliminates debt. Those determined to have at least $100 a month left over after paying certain debts and expenses will have to submit a five-year repayment plan under the more restrictive Chapter 13 guidelines.

Brunton said some who poured into his office were frightened about the changes, but he said most of his clients won't be affected.

"What Congress did not outlaw was illness. They did not make it illegal to lose a job," he said. "Bankruptcy primarily is a crisis- driven enterprise."

For bankruptcy court employees, processing the new filings took calling in staff for long days over the weekend, Jamison said.

The process, he said, is "kind of like a pig going through a python." Now that the paperwork is filed, there will be hearings and filings on various motions.

"It will probably take us the better part of six months for the pig to go clear through the python," he said.

Housing and Credit Counseling Inc., which has long offered budget counseling, will open its courses for those going through bankruptcy to the general public. For more information, call HCCI at (800) 383- 0217.

The Associated Press contributed to this report.

Please see SWITCH, Page 7A

Continued from Page 1A

Switch: Court

will stay busy