As a Palos Hills bankruptcy attorney, I have my reasons why the bankruptcy laws changes. I believe that the reason for these requirements that were passed in the Bankruptcy Reform Act, October 17, 2005 is that the government wanted to make sure that individuals have an opportunity to think about alternatives to bankruptcy. The government figured that if someone submits to a credit counseling session and learns about alternatives to bankruptcy, that that person might in fact decide not to file the bankruptcy case. The thinking was, and remember the law was passed thanks to the help and contributions from the credit card industry towards getting the law passed, that less people would file for bankruptcy under the new law once they were involved with credit counseling.
This really was a mistake on the part of the legislature and on the part of the credit card lobby because people who are considering how to claim bankruptcy are required to go to credit counseling. These people are not going to credit counseling before they’ve made the decision to file for bankruptcy, it’s the exact opposite. These people have already made the decision to file for bankruptcy and their attorney is laying out the ground rules and the prerequisites that they have to do before the case can be filed. Thus, when someone who is anticipating filing for bankruptcy meets with a credit counseling agency or does it more likely online or over the telephone, they are just filling a prerequisite before they can file the bankruptcy case.
Studies have shown that people do not change their mind about filing Chapter 7 bankruptcy once they are set on filing and once they’ve gone to credit counseling as a prerequisite to filing. So really, what we have here is a hoop that an individual has to jump through or a hurdle that an individual has to jump over and it basically extracts a certain amount of time and a certain dollar amount out of their life in order to file for bankruptcy. The other items, such as providing the federal tax return and providing paycheck stubs or pay advices does have some sense in that the trustee is supposed to confirm the information provided in the petition. Prior to the law change, individuals would file a petition, they would sign it under penalties of perjury and there would be no actual verification other than oral testimony at the 341 meeting of creditors. Under the current law, the trustee does have the ability to look at their tax return and see if it matches the information in the petition under the Statement of Financial Affairs section and the trustee does have the ability to look at Schedule I which is the income section and see if it comports or complies with the two months worth of pay advices that the debtor and the debtors bankruptcy lawyer have provided to him.