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Consumers rush to file, beat new bankruptcy law

People wait in line under umbrellas against the rain outside U.S. Bankruptcy Court in New York on Friday. Thousands of consumers across the nation filed bankruptcy petitions Friday in advance of a new law that takes effect Monday. (Associated Press / The Spokesman-Review)
Associated Press
People wait in line under umbrellas against the rain outside U.S. Bankruptcy Court in New York on Friday. Thousands of consumers across the nation filed bankruptcy petitions Friday in advance of a new law that takes effect Monday. (Associated Press / The Spokesman-Review)

DENVER – Consumers across the nation crowded into courthouses Friday to file bankruptcy petitions to beat the start of a new federal law that sets stricter standards for seeking protection from creditors.

Residents arrived before dawn at U.S. Bankruptcy Court in Denver and a line of more than 300 stretched outside the building before noon. Some pushed babies in strollers while others nibbled on breakfast burritos or sipped coffee, resigned to a long wait.

Colleen Christian, a nursing assistant from rural Cotopaxi, brought her 14-year-old son Aron to help her with computer work.

“It was a very hard decision because I’ve incurred these debts and I need to pay them,” she said. “But it was such a weight.”

The bankruptcy court in Atlanta was so crowded that only people with bankruptcy paperwork were being allowed on the floor where the court is.

A federal bankruptcy court clerk in New York City said several hundred people have shown up, filling three or four courtrooms.

Across the nation, about 100,000 petitions were filed in the first three days this week, according to Burlingame, Calif.-based Lundquist Consulting, which compiles bankruptcy statistics. The firm said 102,863 were filed last week, a record expected to fall.

The new law, the most sweeping reform of the U.S. Bankruptcy Code in decades, takes effect Monday, setting new limits on personal bankruptcy filing and requiring people to get professional credit counseling before they may file petitions. It will prohibit most filers with above-average income from filing Chapter 7 petitions that allow debts to be wiped out.