Bankruptcy reform may have backfired

WASHINGTON, March 23 (UPI) -- Individuals bankruptcy filings are again on the rise and may reach 1.6 million this year, a law professor at the University of Illinois said.

Filings increased 32 percent to 1.1 million in 2008, in spite of a 2005 reform law that grew out of concern about rising bankruptcy rates, USA Today reported Monday.

Before the reform bill, in 2005, 2 million filed for bankruptcy. The number dropped substantially after the bill passed, partly because of people rushing to file before the reform bill took effect, the newspaper said.

If layoffs continue and tight credit cuts off refinancing options, the number could reach 1.6 million professor Robert Lawless said.

"There is continuing concern about the bankruptcy-reform bill and what its effects have been," said. Sen. Sheldon Whitehouse, D-R.I.

Whitehouse chairs the Senate Judiciary subcommittee that monitors bankruptcy law.

On Tuesday, the committee will review a bill Whitehouse has introduced that make it easier for families burdened by revolving debt to turn to bankruptcy, the newspaper said.

A 2008 study, "Did Bankruptcy Reform Fail?" found that "all we have done with the law is to delay the inevitable and possible made situations worse," University of Michigan Law School Professor John Pottow said.