Oklahomans rush to seek bankruptcy protection
Saturday, October 15th 2005, 12:03 pm
By: News On 6
OKLAHOMA CITY (AP) _ Thousands of Oklahomans sought bankruptcy protection Friday to escape new federal rules that make it tougher to wipe out debt.
Grant Price, clerk of the U.S. District Court for Oklahoma's western federal judicial district, said he expected more than 2,000 cases to be filed by late Friday. A typical day brought about 40 cases to the Oklahoma City courthouse, he said.
``This is the reality,'' Price said. ``This shows the fear and panic and debt that's out there.''
Attorneys' representatives, most toting scores of 11th-hour filings, waited up to six hours to get their paperwork accepted at the courthouse.
The backlog was particularly acute at the federal courthouse in Oklahoma City, where every case must be filed on paper and stamped by hand. Attorneys submitting bankruptcies in Tulsa and Okmulgee are required to file electronically. At those courthouses, only those without an attorney submit their cases on paper.
Danny Atterberry, an assistant with Christopher Wood and Associates law firm in Oklahoma City, pulled a little red wagon overflowing with 48 bankruptcy filings down the marble halls outside the court clerk's office in Oklahoma City.
``We normally do about five to 10 (bankruptcy) cases a week,'' Atterberry said. ``We've done 100 in the last two weeks.'' He said another 100 potential clients waited too long to complete paperwork needed to get their cases filed before Monday's deadline.
In Okmulgee, Clerk Therese Buthod and her staff were prepared to work through the weekend. Many debtors called the clerk's office seeking help with filings after overwhelmed attorneys stopped taking cases, Buthod said.
Legal secretary Rayshel Longley said her Midwest City law firm is among those turning away potential clients.
``People are still calling firms wondering if they can still get in,'' Longley said. ``No _ you can't.''
The landmark bankruptcy legislation, signed April 20 by President Bush, institutes a means test to determine debtors' ability to repay their creditors. Oklahoma residents who earn more than $31,375 (or $49,881 for a family of four) a year will have to file bankruptcy under Chapter 13, which requires at least partial repayment of creditors over a three- to five-year period.
Currently, the vast majority of personal bankruptcies filed are Chapter 7 liquidations, which discharge most debts.
The new rules also require credit counseling before filing and financial tutoring before the case can be discharged. Tax forms and income statements must be filed with the court, and penalties for hiding assets have been strengthened.
The new requirements also mean bankruptcy will be more expensive, as filing fees and attorney fees will be hiked and debtors must pay for their mandated credit counseling.