Government Report Confirms That Bankruptcy Reform Cost The US Trustee Program An Extra $72 Million So Far

The 2005 reforms to Bankruptcy Law were right out of George Orwell’s 1984. Congress gave the law a cute title (“Bankruptcy Abuse Prevention and Consumer Protection Act of 2005”) that means the exact opposite of what the law actuallys says and does. The new law did not protect consumers – it hurt them. Badly. All the law did was make bankruptcy a more costly and confusing option, although it is still very much available as an option for those in debt or foreclosure. While the new law did curtail abuses by repeat filers, it also put obstacles and added costs in the way of honest consumers looking for debt relief.

Now, a 7/28/08 GAO Report has confirmed that the bankruptcy reform act adversely affected the U.S. Trustee Program (USTP), the federal judiciary, consumers filing for bankruptcy, and private trustees because of increased costs and the burden of credit counseling and debtor education requirements. According to the GAO report, the USTP estimated that its costs to carry out new responsibilities of the act were approximately $72.4 million for fiscal years 2005 through 2007. Where did this $72 million come from? Was anything useful really accomplished from all this extra spending?