Bankruptcy lawyer John D. Burns plans to fly to London today for a brief vacation he scheduled months ago, figuring that once the new bankruptcy law kicked in this week it would be quiet in the office and a good time to catch his breath.
He was right. Though client calls are trickling in, it's nothing like a week ago when his Greenbelt law firm filed at least 89 bankruptcy petitions, compared with the usual five to 10 a week.
"It was an avalanche," Burns said.
That avalanche slowed Monday, when the biggest overhaul of the system in decades finally took effect. The new law, pushed by credit-card companies, sets up hurdles for individuals wanting to wipe out debt through bankruptcy, and places more burdens on their lawyers. There are all sorts of complicated rules and new deadlines that will take getting used to by lawyers, trustees and judges.
"I heard one local judge say recently, `At least we are starting out on the same page,' " said Craig W. Stewart, a Laurel lawyer. "We are all feeling the same sense of `What's next?' just from different perspectives."
Some lawyers predict it may be weeks before filings pick up again.
"I won't file a case for a month or even longer. I want to see how the system operates," said Philip I. Klein, an Owings Mills lawyer. "I went to two seminars already. Even those who give the seminars don't understand exactly how it works. I'm not going to be the guinea pig."
What a difference a week makes.
Lawyers last week were besieged by panicked debtors trying to file under the old law. In the week before changes took effect, more than 200,000 personal bankruptcies were filed nationwide, according to Lundquist Consulting Inc., which still is tabulating figures. Normally, courts get a total of 30,000 cases a week, the research company said.
Marylanders, from the elderly poor to former heavyweight boxing champion Riddick Bowe, were part of the rush.
More than 9,000 cases were filed in Maryland the week before the new law, with 5,620 of those filed on Friday, Saturday and Sunday.
"That's an extraordinary number," said Mark D. Sammons, clerk of the U.S. Bankruptcy Court in Maryland. "On a normal weekend, we may get 15 cases, and on a normal Friday, probably 75 cases."
Desperation ran high as the deadline approached.
Sammons said a judge told him of a man in Baltimore who tried to file at 1:20 a.m. Monday. A courthouse security guard used hand signals to explain that it was too late to file, but the man shoved his paperwork through a crack in the door and left, Sammons said.
About 20 to 40 cases were filed in Maryland on the first day of the new law. Those debtors had intended to file under the old law and mistakenly thought they had until Monday night before the rules changed, Sammons said. They filed anyway. Their cases may end up being dismissed or the debtors may be given a small window of time to amend their petitions to comply with the new law, he said.
Complying will mean jumping over more hurdles, including means testing and credit counseling. The aim is to reduce the number of filings under Chapter 7, where nearly all debts can be erased, and to steer consumers into Chapter 13, where they must repay at least some debt over five years.
Debtors at or below the median income for their state could still qualify to file under Chapter 7. In Maryland, the median income for an individual is $46,624. Those earning more will need to go through additional means testing.
Debtors also must receive a certificate to show that they underwent credit counseling by a government-approved nonprofit within six months before filing. The counseling must include a discussion of alternatives to bankruptcy.
Money Management International, a Houston-based counselor that can offer bankruptcy counseling nationwide, said it received 220 calls Monday.
Consumer Credit Counseling Service of Maryland and Delaware, one of the nonprofits authorized to counsel Marylanders, began pre-bankruptcy counseling Friday.
As of Monday, the nonprofit counseled a handful of debtors over the phone, all of whom were intent on filing for bankruptcy, said Jim Godfrey, executive vice president.
"They all wanted their certificates and they were all going later to see their attorneys," Godfrey said.
Attorneys complain about heavy burdens placed on them under the new law.
Mark Scurti, a bankruptcy lawyer in Baltimore, said when a prospective client came in this week to file, it was a challenge to make sure all requirements were met. One of them is to tell prospective clients that they don't need an attorney to file for bankruptcy, he said.
"We have so many restrictions under the new law," Scurti said. "I found myself referring to a check list to make sure of what I could say."
Lawyers also are concerned about rules that will make them liable for the accuracy of client information submitted to the court.
"People will be hard-pressed to find an attorney willing to do consumer cases. There is so much exposure for the attorneys personally," said Sarah E. Longson, president-elect of the Bankruptcy Bar Association for the District of Maryland.
Longson typically represents creditors in corporate cases, but occasionally volunteers to handle a case for an individual in need. She said she will no longer do so.
But Merrill Cohen, a Chapter 7 trustee in Bethesda, said the new law won't be as onerous as many fear and filings in Maryland will return to levels seen earlier in the year.
"With the economy the way it is, with credit-card use and delinquencies at a high rate, with mortgage interest rates going up, with the cost of fuel and gas going up, there is going to be a need for people to seek bankruptcy relief," Cohen said. "They will be able to under the new law."