Study: Few Are Able to Repay Under New Bankruptcy Law.

New York -- Recent data show controversial bankruptcy law reforms enacted in October 2005 are proving opponents of the law correct, with up to 97% of those affected unable to repay any debt.

A National Association of Consumer Bankruptcy Attorneys study found that of the 61,355 consumers seen so far by credit counseling firms, "the required first stop under the new bankruptcy law," 97%, or nearly all, cannot repay debts, while 79%, or nearly four out of five would-be filers, "were forced in to dire financial straits by circumstances beyond their control," such as job loss, catastrophic medical expenses or the death of a spouse.

"Credit counseling organizations now know what bankruptcy lawyers and other experts said all along: Congress got it dead wrong when it passed the bankruptcy law," said NACBA executive director Brad Botes.

"Even though the process now is more cumbersome, time consuming and [more] expensive than before, consumers who need help should still seek out a bankruptcy attorney to explore their options and figure out how to navigate this trickier and more confusing process."

The report found that only 3.3% of all customers were to profit from the new law's debt management plan option that would allow them to pay off their debt.

Also, NACBA found that only 21%, or one in five, of the respondents were identified as suffering from debt due to "circumstances within their control," which includes customers who "did not deliberately seek out to get in over their heads financially," but did not fully understand how credit card fees and finance charges put them deeper into debt from which they could not get out of unless they filed for bankruptcy.

Contrary to claims of supporters that these regulatory ...