The new bankruptcy legislation enacted on October 17, 2005, apparently only had a temporary effect on the number of bankruptcy filings. Some statisticians predict that filings will reach their previous levels in a year or more, according to the Baltimore Sun.

“The intent of the new law is to force more filers into Chapter 13 plans. These plans require more filers to make payments to their creditors as opposed to a Chapter 7 filing that completely discharges their debt,” said Jeffery Freedman, senior partner at Jeffery Freedman Attorneys at Law, according to Buffalo Business First.

The legislation provisions allowing for six months of pre-bankruptcy credit counseling has made little impact on directing people away from bankruptcy. The Baltimore Sun reports that, at the time, critics of the new law claimed few people were actually abusing the system. This supported their complaints that the law would not significantly reduce bankruptcy filings.

On the other side of the issue, banking proponents who pushed hardest for the legislation saw the early numbers as vindication for their efforts. Now they are saying that the rising numbers do not reflect the long-term efficacy of the law and that the levels being seen are lower than those in recent times when personal bankruptcies numbered more than a million annually, according to the Baltimore Sun. Bankruptcies rose 30 percent, to 2 million, before the new law took effect, last year.

Fritz Elmendorf, spokesman for the Consumer Bankers Association, told the Baltimore Sun that the decline in filings “does not suggest that there was a lot of discretionary filing, which was the key argument that we put forward. It’s often become something of a financial planning tool, and it’s not necessarily people at the very end of their ropes.”

Still, Senator Charles Grassley (R-IA) told the Des Moines Register that current filing statistics leave him “hard-pressed that we’d be at the 2004 numbers by the end of the year.”

Bankruptcy attorney Rory Ellinger told Black Enterprise that although experiencing a reduction in bankruptcies lately, a reduced number of filings should not indicate there is any automatic reduction in the number in creditors starting collection actions on people and families experiencing financial hardship.

The critics, including attorneys, respond that rising energy costs, as well as increased credit card minimums and how higher interest rates will impact adjustable–rate and interest-only mortgages, will seriously affect those currently living on the borderline, according to the Baltimore Sun.

Brad Botes, executive director of the National Association of Consumer Bankruptcy Attorneys, told the Baltimore Sun, "Congress tried to cure the sickness of too much debt by making it harder to get to the hospital." He finished, “There is no other viable alternative. People have significant money problems.”

The Memphis Daily News reported that the reason people and companies, especially, file for bankruptcy protection are the “unknowables.” These are variables, like the arrival of well financed competitors that can dissolve a business’ solvency.

Bankruptcy attorney Norman Hagemeyer told the Memphis Daily News, “I’ve been told by the principals that these big box, or whatever you call them, retailers came into town, and that puts a strain on a lot of smaller places that were specialized.”