October 14, 2005
People around the country lined up today, all in an effort to file bankruptcy before the laws change on Monday. The new laws will make it more difficult to wipe the slate clean.
People nationwide like Alan Wartsky are rushing to avoid new bankruptcy laws.
"I had a van, a truck, a sports car and a boat," he said.
Wartsky, who suffers from bipolar disorder, went on spending binges while off his medication. He racked up $250,000 in debt. But because the 54-year-old CPA makes above the state's average salary, under the new laws, he would not qualify for Chapter 7 bankruptcy.
"If Alan had waited beyond the October 17th deadline, he would be obligated to pay most, if not all of that money back," said Bankruptcy Attorney Peter Koulikourdis.
The new Chapter 13 bankruptcy is less lenient that Chapter 7. It targets those who have the means to pay.
"What this law focuses on are those people who do have significant means to pay, and says those people shouldn't be allowed to walk away totally [free] from their obligations," said Wayne Abernathy from the American Bankers Association.
But many bankruptcy attorney's feel these new laws are too demanding.
"It not only sets them up for failure, it, in certain cases will make success almost impossible," said David Shaev.
This is a failure that Holly and Kevin Kelling are also trying to avoid. Medical bills from a series of surgeries for their daughter have driven them $20,000 in debt. They are desperately trying to file before Monday's deadline.
With the new laws, a person filing for bankruptcy will be forced onto a a payment plan that could allow them $100 a month after all their expenses are paid. This is an amount that some say will just drive people to more desperate measures.