People Rush to File Bankruptcy Before Law Changes

People Rush to File Bankruptcy Before Law Changes

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Tonya Papanikolas ReportingAll over the country Americans are rushing to file for bankruptcy before federal law changes. Utahns are no different; bankruptcy attorneys have their hands full this week.

At bankruptcy law offices like Rulon T. Burton, attorneys are hard at work helping people file bankruptcy papers.

Justin Burton, Bankruptcy Attorney, Rulon T. Burton & Associates: "Yesterday we filed 12 cases, today 13 or 14, and I expect it to be higher each day through the weekend."

Roger Price, Filing for Bankruptcy: "Came here to actually finish paying for my bankruptcy so they can get it filed today."

Roger Price always intended to file now.

Roger Price, Filing for Bankruptcy: "Things just got really crazy. It snowballed and snowballed and got out of control."

But many people are rushing to meet a deadline because federal bankruptcy law will change Monday.

Justin Burton: "It will be a more complicated process, a more expensive process."

Burton says the documentation required to file a case will more than double. Those above the median income will have a harder time qualifying for chapter 7 bankruptcy, which eliminates debt. Instead, they'll be urged to file for chapter 13, where they repay a portion of their debt.

In June, July and August, bankruptcy filings here in Utah had gone down compared to last year. But in the last month and a half, that trend has definitely changed. In September 2004 just over 18-hundred Utahns filed for bankruptcy. This year that number jumped 22-percent.

Already this month, Utah bankruptcy court has seen more than 13-hundred cases, compared to 17-hundred for the entire month last year.

Justin Burton is working hard to fit everyone in, but he warns people not to rush if they don't need to.

Justin Burton: "In large part, most of the people that could file before will still be able to file bankruptcy."

They may just have to pay a little extra, which is why Price is glad he filed now.

Roger Price: "I'm already having money problems, so if it saves me a little bit of money in the long run, that's what I'm looking to do."

Bankruptcy attorneys will help clients do that until the end of the week.

The law was partially designed to cut down on bankruptcy abuse, but Burton says, ironically, it may end up affecting a lot of poor people who can't pay extra fees and may not have all the records they need.

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