Chin Up!...At Least the Elections Over.

I am writing this before all of the votes have been tallied. Regardless, who you voted for, don't expect big changes with regard to bankruptcy law. Bankruptcy laws only go through big changes every 25 years or so. For the most part it's a matter of tweaking and fine-tuning existing laws. BAPCPA went into effect in 2005 and has had some pretty serious drawbacks and unintended consequences.  The purpose of BAPCPA, at least as it was sold to Congress, was to drive up the use of Chapter 13 reorganization (repayment) because many more people who could pay back their debt, were utilizing Chapter 7 instead.  Well, Chapter 13 filings didn't go up, and in many states actually went down.  The problem with Chapter 13 is it doesn't leave a lot of room for uncertainty.  It assumes that the conditions in someone's life will sit stagnant throughout the life of the plan.  That's why the failure rate is so high. 67%.  That's right for every 3 people who file a Chapter 13 case, 2 will fail.  While, Congress may have spent time trying to figure out a way to push people into Chapter 13, it spent no time trying to make the option more palatable.

I definitely believe that Chapter 13 is a viable option for many debtors, and that it has a really important place in bankruptcy law.  But Chapter 13 isn't Chapter 7.  If you need to reorganize you have to approach an attorney as soon as the debt slide starts, not at the end.  By then, you may be setting yourself up for failure.  We often look at Chapter 7 as what you do when you are on your last leg.  Well, Chapter 13 is what you do when you have both your legs but one has been persistently aching.