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Despite Changes in New Law, Evidence Shows Consumers Still Filing for Bankruptcy; In the Face of Higher Interest Rates, Minimum Credit Card Payments and Energy Costs, Consumers Can File for Bankruptcy Protection under New Law.

WASHINGTON -- The National Association of Legal Document Preparers, Inc. (NALDP) today said that despite changes in the bankruptcy law, evidence is showing that economic conditions are forcing consumers into Chapter 7 bankruptcy.

The largest credit counseling organization in America, Money Management International, reported that in the 13 weeks after the new law took effect Oct. 17, a mere 4.5 percent of the 14,907 debtors counseled by MMI had enough income to enter into a repayment plan(1). Ninety-five percent of those going in for credit counseling are coming out and filing for bankruptcy protection. Anecdotal evidence gathered from legal document preparers across the nation, mirror those statistics.

"The evidence is clear that Chapter 7 Bankruptcy is the only option for most consumers to get a new financial start," said Lizanne Sadlier, Director of NALDP. "They are beyond the point of being able to afford a re-payment plan. You can't alter basic human economics."

"In 2006, family budgets are expected to be hit from a variety of angles," said Sadlier. "Credit card companies are now required to raise minimum monthly credit card payments to almost double what they were; higher interest rates have already taken their toll; parts of the country are bracing for record high heating and energy bills; and gas prices are creeping up to post-Katrina levels."

Sadlier added, "We want to let families, who are feeling unsure about their financial future, know that legal document preparers can help them get their footing to begin the rebuilding process."

Bankruptcy filings fell to a weekly rate of about 3,500 compared to 315,000 just before the new law took effect on Oct. 17, but the numbers have increased to about 5,000 per week and are expected to climb.

"As holiday spending catches up and heating bills continue to spike, we are likely to see more and more Americans enter a difficult financial period," said Sadlier. "We want to reassure those who are uncertain that they still have the ability to file under Chapter 7 protection."

Sadlier said, "Legal document preparers across the country are available as an inexpensive and valuable alternative to lawyers to help consumers navigate the new law."

Interested consumers are invited to download NALDP's first publication, How to Prepare and File Chapter 7 Bankruptcy, as a first step to filing. The booklet is available for a small fee at A complete list of federally approved credit counseling agencies is also available at


National Association of Legal Document Preparers, Inc., based in Washington, D.C., is a non-profit organization formed to give a voice and a national forum to the growing number of legal document preparers, legal technicians, online legal document providers and independent paralegals across the country. We are a grassroots network dedicated to the principle that all citizens have a constitutional right to represent themselves; and, in exercising that right, they have affordable access to efficient, effective and ethical legal document preparation services. In addition to those professionals working directly with legal documents, our membership includes public policy, education and consumer advocacy professionals who share a commitment to the principles of NALDP. More information is available at

(1) Source: "Bankruptcy Counseling Law Doesn't Deter Filings" Washington Post, 1/17/06
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Publication:Business Wire
Date:Jan 23, 2006
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