I copied relevant portions of the text from the article above below. There is some really good analysis of the 2005 Bankruptcy law. John Pottow, the bankruptcy professor from the University of Michigan is correct in his points that the law just made more paperwork while not changing the dynamics of people in serious debt.
Its also really fascinating that Alaska and Nebraska, the states with the lowest bankruptcy increases saw bankruptcies grown by 12%. Thats still a big jump in bankruptcies.
“For three years, filings have been steadily rising back toward levels reached early in the decade before Congress overhauled the nation’s bankruptcy laws. The 2005 alterations made bankruptcy filings more cumbersome, a move that followed fears from lenders that some consumers were abusing the system to wipe away debts.
Bankruptcies surged to slightly more than 2 million in 2005 as consumers rushed to file before the new law took effect but then plummeted to 600,000 in 2006. They’ve been climbing ever since and in 2009 became the seventh-highest year on record, behind only the years 1998 and 2001-2005.
The 2005 spike had been preceded by a steady climb from 1.5 million in 2001 to 1.6 million in 2005.
John Pottow, a bankruptcy professor at the University of Michigan, said the return to the highs of earlier this decade illustrates the failures of the 2005 overhaul bill. He said the measure largely made filings more costly and time-consuming by forcing consumers to undergo a paperwork-heavy test to determine eligibility for Chapter 7 bankruptcy and adding liability for attorneys who provide help.
“It never made sense in the first place that you could change the laws and make all these bankruptcies go away,” said Pottow, who would like to see the 2005 law changes repealed. “If people are encountering financial distress, you can only scare them away for so long before they come back again.”
While every state saw a rise in bankruptcies, Alaska (up 12 percent), Nebraska (12 percent) and North Dakota (14 percent) performed best.”