A Penny Saved

Every body remembers the Bankruptcy reform act of 2005.  It was supposed to severly cut back on the amount of bankruptcies and make it harder to file for one.  But did it work?

Credit Slips has a powerful article on that very subject.  As we can see from their inset table and the text, bankruptcy filings surged to over 630,000 filings in October.  The deadline to file before the reform act was October 17, 2005.  We can assume then that the majority of those filings were before the deadline.

What is more interesting is that the following month the number of filings returned to what approximates as normal and has gone on an uptrend ever since.  So, one of two things has happened.  Either the reform act wasn’t as effective as everyone would like to believe, or there are just more people who are truly going bankrupt.

Personally, I don’t think the reform act did much of anything.  Except get nearly 1 million people to file because they were afraid that they would get “stuck” with their debt if they waited.  It’s a disturbing trend that we as American’s go through in our consumerist society.  Unfortunately, I am just as guilty as some others are.  But we’re on the right track here.  Are you?

[tags]bankruptcy, bankruptcy reform act of 2005[tags]