Midnight October the 16th marks a big change in the way Americans seek debt relief through bankruptcy court.
"Anybody that files on October 17th or there after will be filing under the new provisions of the law which will change when people have to file Chapter 13 which would be reorganizations, or weather they qualify for Chapter 7's," says Biloxi Bankruptcy Attorney Robert Gambrell.
Gambrell, who specializes in bankruptcy cases says there's a significant difference in Chapter 13 and Chapter 7.
"A chapter 13 is a reorganization. The person pays money to the Chapter 13 trustee. He takes the money, pays money that, someone's behind on their house note, pays their car loan, pays some money to the unsecured creditors. In a chapter 7, someone files, they may reaffirm and continue paying their car loan as it was, continue paying their house mortgage as it was but the rest of the debt is basically discharged or just wiped out."
Gambrell says new higher legal fees.. more paper work, and a tests of an individuals financial ability to pay those unsecured debts like credit card and medical bills will make filing for Chapter 7 much more difficult. And he say's in South Mississippi, unless federal bankruptcy trustees make a special exception, that could result in yet another disaster.
"You're going to see a lot higher percentage of people filing bankruptcy down here that make more than the median income because of what they lost in Hurricane Katrina. So in our area, if the U.S. trustee doesn't back off and give some special consideration to these people, a lot more people in our area are going to be hurt."