Seminar examines effects of new bankruptcy law

The Springfield Metropolitan Bar Association will present a seminar that examines the first month of application of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which took effect Oct. 17.

“There is a sense in the legal community that the bankruptcy law could possibly affect every area of practice,” said SMBA executive director Crista Hogan.

The seminar also will count for four hours of continuing legal education credit; the Missouri Bar mandates practicing attorneys in the state receive 15 hours of continuing education yearly.

Higher income threshold

The federal law raises the income threshold for people allowed to claim Chapter 7 bankruptcy, a state of liquidation that frees the debtor of repayment obligations.

Now, some debtors must file Chapter 13 bankruptcy, which requires repayments to creditors for up to 60 months and restricts the debtor’s use of credit during that period.

“Debtors don’t want to do that if they don’t have to,” said Lee Viorel, president of the SMBA, about filing for Chapter 13. “They’d rather get the slate wiped clean and go about their business.”

Viorel, a practicing attorney who often represents banks and other creditors in bankruptcy cases, will speak at the seminar about the law’s effect on creditors.

He said the U.S. Trustees Office uses a formula that looks at a debtor’s previous six months of adjusted gross income – a means test – to determine whether they qualify for Chapter 7 or Chapter 13.

For example, he said, a family of four would have to make less than $61,858 to still qualify for Chapter 7.

“The trustees are sort of the front line on what they call the means test,” said seminar speaker Dan Nelson, an attorney with Lathrop & Gage LC and panel member of Chapter 7 bankruptcy trustees in the Western District of Missouri.

Nelson will tackle the issue from the trustee’s perspective.

Joining Viorel and Nelson as seminar speakers are Raymond Plaster with the debtor’s perspective and bankruptcy Judge Arthur Federman with the courts’ perspective.

Filing surge

Viorel forecasts two main effects of the Bankruptcy Act: fewer bankruptcies filed across the board and a reduction in careless consumer credit card use.

However, he said, reliable indicators of whether the Bankruptcy Act worked for its intended purposes won’t be available for another few months since so many people filed for bankruptcy leading up to the Oct. 17 deadline.

More than 1,400 consumers filed for federal bankruptcy protection in Springfield in the week before the deadline, more than 10 times the weekly average.

He said some time is needed to readjust from that surge of filings.

Seminar specifics

The seminar will start at 3 p.m. at the SMBA offices, 1615 S. Ingram Mill.

Advance tickets are $80 for SMBA members and $115 for nonmembers. Tickets at the door are $95 or $130.

“We thought that this program would be good because it’s going to represent really all perspectives,” he said.

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