This past year the media flooded our airways and television screens with news about the new Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Those changes took effect on October 17, 2005, after being in the hands of congress for eight years before George W Bush signed it into law last April 20, 2005.

Individuals rushing to beat the effective date of a new bankruptcy abuse reform law pushed the number of bankruptcy filings up 10% in fiscal year 2005, according to the Administrative Office of the U.S. Courts. It was the highest number of bankruptcies ever filed. During the 12-month period ending Sept. 30, the court said 1,782,643 bankruptcies were filed--up from the 1,618,987 bankruptcy cases filed in fiscal year 2004. Filings for the three-month period from June 30 to Sept. 30 also were the highest number filed for any quarter in the history of bankruptcy, totaling 542,002.

Regardless of these new changes that will effect how consumers file Bankruptcy in the future, it’s important to understand that the process alone is not a pleasant experience. The single most effective change is called the “means” test. Each new filing will be subjected to the means test to see if they have the ability to repay their debt based on the household income. If your income fits within the medium income for Washington State, most likely you will be forced to repay all your debt through a Chapter 13 process. Chapter 7 Bankruptcy will clear up all your debt.

In 2005 we only experienced three Bankruptcy filings prior to the October deadline, which brought the total for the year to ten. Eight out of the ten were Chapter 7, which gave the member the ability to have a clean slate. Considering the amount of potential loss of $126,400, it says something about our membership that only three members chose to not repay SLECU in the amount of just $26,100.

From time to time members do go through tough times and feel that Bankruptcy is the only way out, but more often than not, there are ways to cure hardships in a more positive fashion. If you feel the crunch from paycheck to paycheck, have made a number of trips to money store borrowing, or just feel like you are robbing from Peter to pay Paul, please stop by my office so we can come up with an alternative solution other than Bankruptcy.

In closing, I want to express my sincere gratitude to an awesome membership who very rarely lets us down. We like to think we lend money the old fashion way, “In trust; An Act of good Faith.” If I could still lend with just a handshake, I would! Time after time when members go through these hardships they always express to me the same comment; “This credit union has always been so good to me, I want to pay you back, regardless!” We just want to say “Thanks.”

Yours Truly, 


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