Submitted by admin on Sat, 2005-10-08 07:00. ::
In typical times, maybe 100 state residents a day seek bankruptcy protection. But the caseload hitting the court on a daily basis has soared past 500 and could surpass 1,000 on Friday as debtors scramble to beat an Oct. 17 deadline.
Brad Bolton, who has served as the clerk of the bankruptcy court for more than 25 years and provided the estimates, called the flurry of filings a "tidal wave."
After Oct. 17, it will get harder and costlier to qualify for Chapter 7, the more forgiving form of bankruptcy that allows filers to wipe out much of their debt.
The reform will steer more people into the tougher Chapter 13, which requires debtors to stick to a repayment schedule, and will lead to extra filing fees and other requirements, such as mandatory credit counseling and debt education.
Plenty of Coloradans, smarting from job loss, medical bills, divorce and heaps of credit-card expenses, say they likely would have made the decision anyway, yet the impending deadline accelerates the move. Lofty gasoline prices and looming increases in home heating costs conspire to make matters worse for people who are a paycheck or two away from poverty.
Those factors drive the procession of long faces and lawyers through the corridors of the bankruptcy building near the corner of 19th and California streets.
After passing through a metal detector, debtors find a seat in a sterile hearing room where they anxiously await an interview. Raising their right hands, promising to tell the truth and leveling with the trustee, some confess they behaved recklessly, reaching for their wallets with little regard for the consequences.
The 52-year-old Denver resident wasn't ready to stop working. Dykstra had done foundry work, casting metals, for three decades at several companies.
However, the physical work, "the twisting and turning," takes a toll on the body, and eventually he wore out a knee and a shoulder, serious injuries that left him on the employment sidelines, he said.
While Dykstra's wife still works, his disability pay of about $1,500 a month was merely a third of what he had earned previously, he said. Paying for his two daughters' weddings and a trip to Romania for his son's wedding a couple of years ago put the two in a hole, said Dykstra, who now has an artificial knee.
"You put it on a credit card thinking you'll be able to pay it back, but when you lose your job all of a sudden you can't pay it back," he continued.
Their retirement plan to build a home on a 2.5-acre property near Hartsel in Park County and to "enjoy life" now seems out of reach. They may need to give up the land, which they bought several years ago, as part of the bankruptcy proceedings, he said.
Yvonne Coulmas can relate. In the spring of 2003, she said she lost her nearly $50,000-a-year job working on the help desk at Intuit, the maker of personal finance software, and hasn't found anything comparable since.
"I could see that the most I could make was a little over half of what I was making, and because of that I felt I had no choice," said Coulmas, 57, who recently filed for Chapter 7. "I had come to the conclusion that was all that was out there."
"I figured if you're going to do it, you might as well do it now," said the Denver resident, one of thousands of people who has headed to the bankruptcy court in recent days.
"After two years, I can see things are not going to get better," she said, adding that plenty of jobs are available from her vantage point, but not ones that dish out respectable paychecks.
The new bankruptcy bill was designed to crack down on those who abuse the system and use their credit cards extravagantly only to have their bills erased. But some argue the bill may yank a safety net out from under debtors who have fallen on hard times because of unforeseen problems.
"Credit-card debt is not typically why people file for bankruptcy," Jeffrey Weinman, a trustee in Denver, said in a recent telephone interview. "They file because they get sick and because they don't have medical insurance. They file because they get divorced and can no longer afford to pay their bills. They file bankruptcy because they lost their jobs."
Under the new law, only single debtors who earn more than the median household income in Colorado of about $40,000 and able to pay $6,000 over five years after taking care of essentials such as food and rent will be forced into Chapter 13.
Aaron Holder, 33, seemed to be sitting pretty early this year. The Aurora resident said he earned $70,000 last year at a medical staffing company and managed to whittle down his credit-card debt. Getting health insurance was the next step he needed to take, and he made the arrangements to pay for it.
The doctors' expenses added up to roughly $50,000, he estimated. One bill alone from the Medical Center of Aurora came to $19,818, his bankruptcy filing showed.
"I was in my hospital bed when I realized this was an out-of-pocket expense I couldn't afford," he said, taking a quick break outside his office in Aurora.
"I felt like I was finally at a point in life where I was comfortable," he continued. "I had a good job. I had the debt control down, and now I feel like I'm at ground zero and have to start over again."
Holder, who filed for bankruptcy in August and has forfeited assets including a time share and a car, said it's a misconception bankruptcy filers ended up in a hole because they acted carelessly and overspent.
Bobbie Hunt, 43, also saw her life change course quickly. The boarding manager at Evergreen Veterinary Service, which cares for pets, recently filed for Chapter 7 with about $45,000 in debts.
Filing bankruptcy stays on a credit report for up to 10 years and can make buying a car or house, renting an apartment, borrowing money and even getting certain jobs very hard.
But Hunt said her ambition is to start her own pet grooming company, with start-up help from her current employer, and she wanted to embark on that path debt free.
It sets up a new test for measuring a debtor's ability to repay. People with insufficient assets or income still can file a Chapter 7 bankruptcy, which erases debts entirely after certain assets are forfeited.
It requires billing statements for credit-card accounts to include an example of how long it would take to pay off a balance at a specific interest rate if only minimum payments are made.
The law limits the exclusivity period, the 18-month span during which a company in Chapter 11 has the sole right to propose a reorganization plan. Debtor companies are no longer given unlimited extensions of the exclusivity period.
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