The good news is that, according to the U.S. Bankruptcy Court, U.S. bankruptcy filings are down in 2013 compared to 2012. Slightly more sobering is that the annual bankruptcy filings in the US continue to exceed 1.2 million.
Although annual bankruptcies have regularly exceeded 1 million since 2000, it used to be a rare occurrence. With so many bankruptcies each year and the requirements of the new bankruptcy law, this is big business, and many people are employed as bankruptcy specialists.
The implementation of the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act was designed to make filing bankruptcy more difficult.
The legislation was first proposed in 1998, the same year that annual filings exceeded 1 million for the first time in history, but was blocked by President Clinton. The act failed to gain enough support until 2005, when it was passed into law by both the US senate and house of representatives, and signed by then president George W. Bush.
Most people think that becoming a bankruptcy specialist requires a law degree and years of additional training and special experience. While many lawyers specialize in bankruptcy, and it is a recognized specialty of law many attorneys will include other experts on their team like forensic accountants and real estate professionals who also specialize in bankruptcy and foreclosure.
For simple cases, many attorneys outsource the preparation of forms for filing bankruptcy to outside independent contractors. Bankruptcy filing services that are not law firms cannot provide legal advice. Some larger offices specializing in bankruptcy employ one or more bankruptcy specialists, working under the supervision of a bankruptcy attorney, who prepare and file papers with the court, notify creditors and maintain communication between the law firm and the client. Bankruptcy specialists typically have a minimum of an associate’s degree in business, accounting or related field, or alternately 3-4 years similar work experience.
Although corporations and partnerships must use an attorney to file bankruptcy, it is possible to file bankruptcy without the help of an attorney, called “pro se”, meaning “for oneself”. The US bankruptcy court strongly urges individuals that are considering filing bankruptcy to seek the help of a competent attorney and recommends contacting the appropriate state bar association. State bar associations maintain lists of attorneys practicing in various specialties, in each geographical area they cover.
One of the major changes with the new bankruptcy law was the requirement that individuals planning to file under Chapter 7 or 13 must complete a credit counseling course within 180 days before filing for bankruptcy. After filing, they must also complete an instructional course in personal financial management from an approved non-profit provider. These organizations hire specialists in bankruptcy related credit counseling and education. Councilors typically have a minimum of an associate’s degree and complete specialized training in bankruptcy related counseling through their employer.