BAPCPA in the News
Below are some news articles referencing BAPCPA-related topics we thought you'd find interesting.
Investors Business Daily provides this article citing to the impact of BAPCPA on IRA's. It states:
BAPCPA, meanwhile, has a much greater impact on IRA owners, says Keebler. Under that law, IRAs are shielded from creditors in bankruptcy proceedings. Keebler says professionals interpret the new law as creating two exemptions: one for rollover IRAs from employer-sponsored pension plans such as a 401(k) and another one for $1 million in traditional IRAs -- that's $1 million in contributions not the earnings on those contributions.
But lawyers for creditors see it differently, he says. They see only one exemption, one that protects IRAs up to $1 million -- period.
The courts will tackle this issue at some point. But in the meanwhile Keebler suggests that owners of large employer-sponsored retirement plans who are concerned about creditor protection need to look at their state laws before rolling from a "federally sheltered" employer's plan into an IRA.
If the plan is large enough, if the retirement money is exposed to creditors and if the state has weak IRA protection laws, it may be wise to leave the money in the employer's plan until the matter is resolved.
Crain's Chicago Business ran a story quoting K&E's Jamie Sprayregen, who commented on some problems with BAPCPA at a recent Navigant Consulting Legal Roundtable breakfast. The story quotes him as saying:
[BAPCPA] will likely create more litigation and headaches for companies undergoing restructurings....
Litigation related to several new provisions also could take three to five years to resolve.
[BAPCPA] is not good bankruptcy policy. It will take a long time to sort out � having been written in the dark and not being vetted [and with] no holistic thought to reform the system.
According to the article, he also said that additional litigation will be spawned by the "catch-all" provision that for the most part bars payment or obligations, outside of the ordinary course of business, "for the benefit of officers, managers, or consultants hired after the date of the filing of the petition." He's not out to change the law, however, the article reports, just "deal with the cards I am dealt." As I said before, don't say we didn't warn you!
The Washington Post reported here on the unexpected sharp drop in consumer filings post-BAPCPA's enactment. The article states:
Last week, the nation's federal bankruptcy courts received about 3,600 petitions, according to Lundquist Consulting Inc., a California financial research firm that tracks bankruptcy data from the nation's courts. In a usual week, about 30,000 cases are filed. Of course, nothing has been normal at the bankruptcy courts for the past few months, as the more restrictive law took effect on Oct. 17. In the week before the deadline, the number of cases filed reached 479,430, Lundquist said. The previous week, petitions totaled 124,037.
Investor's Business Daily reports here in a story entitled "Bankruptcy Spike Before Change Spurs Q4 Credit Card Write-offs" that "[o]ne early impact of the 2005 bankruptcy reform law is that more credit card portfolios are turning red, at least for a little while." According to the story, American Express, "[t]he No. 4 card issuer expects total write-offs to surpass fourth-quarter 2004 by $200 million to $275 million." The article also quotes Fitch Ratings as saying, "All told, the rush to file will boost U.S. credit card charge-offs by at least 30% over the next three to four months."
For those looking for a positive spin to BAPCPA's effect on consumers, see Realty Times's report: "New Bankruptcy Law Teaches Debtors Financial Lessons." It contains a few useful tidbits of information on credit counseling.
© Steve Jakubowski 2005