Facing a weekend deadline, thousands of people armed with bulging files of paperwork lined up at courthouses around the nation Friday to seek bankruptcy protection from creditors before a new law makes it much more difficult to shed debt.
The number of cases filed before the law takes effect Monday was expected to set not only a national record but individual records in a number of states. Some clerks said bankruptcy filing records were beaten every day this week.
In Denver, the line at bankruptcy court formed before dawn and quickly grew to more than 300 people as it stretched outside. Some pushed babies in strollers, while others sipped coffee and sodas.
Nursing assistant Colleen Christian brought her 14-year-old son to help her punch figures into a court computer after spending long days on Chapter 7 (search) paperwork at her home in tiny Cotopaxi, 100 miles south of Denver. With credit card debt hovering around $25,000, she said she had no choice but to file before the law changed.
"It was a very hard decision because I've incurred these debts and I need to pay them," she said. "But it was such a weight."
In Chicago, people crowded the hallway outside a packed waiting room for their initial meeting with a bankruptcy trustee.
Substitute teacher Barbara Moore said she had been mulling a Chapter 7 filing for a few years when she heard about the pending law change. She was fearful medical expenses from a cancer diagnosis could add to her mounting credit card debt.
"That's when I decided to stop dillydallying," said Moore, 51. "It just sounds like it's going to be much more difficult and expensive later."
The law, the most sweeping reform of the U.S. Bankruptcy Code (search) in decades, sets new limits on personal bankruptcy filing and requires people to get professional credit counseling before they are allowed to file petitions.
It will prohibit most filers with above-average income from filing Chapter 7 petitions that allow debts to be erased. Instead, people deemed to have at least $100 a month left over after paying certain debts and expenses will have to submit a five-year repayment plan under more restrictive Chapter 13 (search) guidelines. The law also sets some restrictions on businesses.
Supporters believe the changes will help rein in consumers who pile up credit card debt only to wipe it out with a Chapter 7 filing. Opponents say the law will hurt those who incur debt unexpectedly such as with health problems or lost jobs.
Since President Bush signed the law in April, the number of personal bankruptcy petitions has soared. Preliminary estimates expect a record 200,000 petitions to be filed this week alone, according to Burlingame, Calif.-based Lundquist Consulting, which compiles bankruptcy statistics. The firm said the current record of 102,863 was set last week.
Clerk Yvonne Evans at the U.S. Bankruptcy Court in Atlanta said all 123 employees were called in to help deal with last-minute filers.
"I can't even begin to tell you how extraordinary this is," she said. "The line is wrapped all the way around the 13th floor. It's wild."
Filings were allowed in person through Friday, though attorneys making electronic court filings have until midnight Sunday.
Christian, whose husband just found work nine months after losing his job, said bankruptcy will enable her to pay what she can. "I think everybody should be able to wipe the slate clean and start over," she said.
Similar stories could be heard at courthouses across the country.
Michael G. Bennett, 36, of Dedham, Mass., filed for Chapter 7 protection after six years of financial trouble left him with $35,000 in debt.
"It hasn't happened overnight," said Bennett, who has a wife and 2-year-old son. "It will be much easier now to keep the creditors at bay."
In Charlotte, N.C., the handful of people filling out bankruptcy petitions included Lorraine Martinson, 44, who was expecting to give birth to her first child Friday.
"Both my husband and I owned our own businesses. I used to have real good credit so I was able to take out all kinds of credit cards," she said. "When we missed a payment, all of a sudden the interest rate was 30 percent."
She said they tried to catch up but found themselves falling deeper in debt.
"We spent a year crying over this," she said. "I'm not happy about it, but what choice do I have?"
At the bankruptcy court for the Southern District of New York in Manhattan, people huddled under umbrellas against the rain as they waited for court to open.
"Right now, my whole thing is to regroup," said Pamela Green, who said debt forced her to close her women's clothing boutique.
In Plano, Texas, attorney Veronica Weaver was holding a stack of cases she planned to file.
"We are seeing a little bit of everything, some of it's for medical reasons, some of it's a job loss and some are behind on mortgage payments," she said.
Bankruptcy attorney Tom Feezey of suburban Chicago ran radio commercials in the recent weeks to notify prospective clients about the law change. Apparently it worked: Feezey said he made 15 Chapter 7 filings this week — triple what he would normally file in one month.
"Now I know what it feels like to be an accountant on April 15th," Feezey said.