N.H bankruptcy filings pile up before deadline

Officials at the state’s bankruptcy court are busy but not surprised at the increased number of filings they are receiving a week prior before tougher, more cumbersome bankruptcy law takes effect.

In September, U.S. Bankruptcy Court in Manchester documented 723 bankruptcy filings — almost twice the 397 filed in August. “This is very common whenever there is a major statutory change in bankruptcy law,” court clerk George Vannah told NHBR Daily. “You always have people wanting to file under the old law because they understand it, they’ve had a chance to digest it.”

The greatest rise is occurring in Chapter 7 filings. While there were 400 Chapter 7 filings in August, 679 were filed in September. Once referred to as “straight bankruptcy,” Chapter 7 filing currently allows for the debtor to liquidate assets in order to pay off as much debt as possible, the balance of the debt not satisfied is discharged with no payback requirements.

The new law that goes into effect on Oct. 17 makes it much harder for individuals to file under Chapter 7. Instead, it mandates that individuals go through “means-testing” and show their income level is below the median income level for their region. Such a requirement will make it much more complicated to file under Chapter 7.
“It’s pretty clear to people that it is going to be a lot easier to file Chapter 7 now than it will be in a few weeks,” Vannah said.

New Hampshire’s increased filings follow a nationwide trend. Nationally September’s daily filings averaged 10,367, up from the 6,079 reported in September 2004, according to statistics compiled by Lundquist Consulting Inc. — TRACIE STONE