Cleveland, OH, January 5, 2005 -Hyatt Legal Plans reports a spike in the number of group legal plan members who sought legal assistance from their attorneys before a new law imposing stricter filing requirements for bankruptcy took effect this year. During the period May 1 through October 31, 2005, the six months prior to the new law taking effect, legal plan usage for bankruptcy was up 56% over the same period in 2004 (according to Hyatt Legal Plans actuarial data).
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which was signed April 20, 2005 and took effect October 17, 2005, makes it more complicated for consumers to erase their debts and start over with a clean slate. Consumers will now have more difficulty qualifying for Chapter 7; hence, more individuals will likely be placed on a repayment plan under Chapter 13.
The new bankruptcy law makes having an attorney on your side more important than ever. A group legal plan allows organizations to offer their employees convenient, affordable access to attorneys for the most common personal legal matters, including bankruptcy, at little or no cost to the employer. Group legal plans also cover debt collection defense and negotiations with creditors, which allow employees to take preemptive actions to help them avoid bankruptcy.
For companies whose employees are dealing with credit problems and facing potential bankruptcy, a distracted employee can cost the company lost productivity and lead to employee absenteeism. Bill Brooks, CEO of Hyatt Legal Plans, encourages companies to consider offering a legal plan and believes that debt collection defense and bankruptcy are two of the most valuable covered services. "Employees dealing with creditor issues and tough financial situations can´t really afford an attorney. If they are enrolled in a legal plan, they get immediate help and the plan pays the attorney´s fees."
In the U.S., bankruptcy filings for the three-month period from June 30, 2005 to September 30, 2005 totaled 542,002, the highest number filed for any quarter in the history of bankruptcy, according to a recent press release from the Administrative Office of the U.S. Courts. Non-business or personal bankruptcy filings during the federal Judiciary´s fiscal year ending September 30, 2005 increased 10% over 2004. During this time there was also an increase in Chapter 7 filings, which were up 17% over 2004.
Brooks advises employees with debt issues to work with an attorney to manage the complicated process. "Now more than ever, it is critical that employees do not try to handle their bankruptcies alone. Bankruptcy is a serious legal matter and has long-lasting effects on an individual´s credit rating and future finances," says Brooks. "An attorney understands the new law and can recommend the best course of action based on an individual´s circumstances."
For those facing personal bankruptcy, Brooks offers the following points to consider:
Hyatt Legal Plans, a MetLife subsidiary, is the largest provider of group legal plans in the country, serving 2.5 million participants through a nationwide network of 4,000 law firms (according to Hyatt Legal Plans actuarial data as of December 15, 2005). For more information on Hyatt Legal Plans, visit www.legalplans.com. Group legal plans are made available by Hyatt Legal Plans, Inc., Cleveland, OH. In certain states, the plans are underwritten by Metropolitan Property and Casualty Insurance Company and Affiliates, Warwick, RI.
MetLife, a subsidiary of MetLife, Inc. (NYSE: MET) is a leading provider of insurance and other financial services to millions of individual and institutional customers throughout the United States. Through its subsidiaries and affiliates, MetLife, Inc. offers life insurance, annuities, automobile and homeowner's insurance and retail banking services to individuals, as well as group insurance, reinsurance and retirement and savings products and services to corporations and other institutions. Outside the U.S., the MetLife companies have direct insurance operations in Asia Pacific, Latin America and Europe. For more information, please visit www.metlife.com.