Bankruptcy Laws

Tracie Melvin, Attorney At Law

The most dramatic change to affect the bankruptcy laws in years went into effect Monday.

Those who file for bankruptcy now face stricter requirements and added steps in the process.

For most attorneys in the Wiregrass, the number of people who filed for bankruptcy in the past two weeks multiplied 10 fold.

Tracie Melvin, Attorney at Law said, "Last week, a lot of people were panicking, calling, saying 'I want to get in and file bankruptcy before we can't file anymore'."

But, the idea that bankruptcy is “no longer an option” is not true.

Under the new law, many will have to file Chapter 13 Bankruptcy and help pay off their own debt. But in the Wiregrass, most who file will qualify for Chapter 7 because of the low income requirement.

Everyone who files as of Monday have to provide more paperwork ranging from showing proof of income, to participating in mandatory credit and financial management counseling.

Attorneys say the law was changed because of presumption of abuse, where they were saying people were just being irresponsible with bills by not paying them off. But Tracie says that's not the case here in the Wiregrass. The top three reasons she has found people filing for bankruptcy is because of medical bills, divorce and work-related injuries.

Melvin says, "I rarely have people who come in who randomly just ran up a bunch of credit cards and can't pay them. It’s usually some legitimate reason."

And she says the most important thing to remember is there is still a way out.

The changes were also made to help people help themselves out of debt.

Counseling services offered are available online and most lawyers offer bankruptcy consultation free of charge.