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Bankruptcy reforms may burden Katrina survivors

[JURIST] Hurricane Katrina [JURIST news archive] survivors already in financial distress face a second hit if they do not qualify under stricter federal bankrupcty qualifications set to take effect Oct. 17. In addition to logistical difficulties of filing for those in areas devastated by the storm, changes made by the Bankrupcty Abuse Prevention & Consumer Protection Act [PDF text], approved last spring [JURIST report], increase paperwork and costs associated with filing for bankruptcy. The law also places more people under Chapter 13 bankruptcy, which requires some repayment of debts, a potentially significant burden for those facing recovery costs from the storm. The Consumer Federation of America [advocacy website] and the National Association of Consumer Bankruptcy Attorneys have both called on Congress [CFA news release, PDF; NACBA news release] to pass a one-year waiver of certain new provisions for those affected by Katrina. Bankruptcy filings caused by natural disasters such as a hurricane typically take several months before they begin to pick up. Knight Ridder has more.

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