The federal bankruptcy overhaul that passed in October 2005 isn’t doing what it is supposed to do, which is cut down on the number of frivolous bankruptcy filings, those filings that were meant to avoid paying off credit cards that had been run up excessively.

The biggest reason it hasn’t succeeded in that, according to a survey of members of the National Association of Consumer Bankruptcy Attorneys, is because those particular filings account for such a small percentage of overall filings.

Consumers are forced into bankruptcy by job loss (39.6 percent) and emergency medical expenses such as long term care (33 percent) far more often than because of “discretionary spending habits” (8.1 percent), according to the survey.

While filings spiked before the law went into effect and fell immediately thereafter, 57.5 percent of bankruptcy attorneys surveyed said they expect the number of filings to reach preoverhaul levels by or before October 2007, the law’s second anniversary.

Mostly what the law – designed to force consumers to file under the more costly and time-consuming Chapter 13 instead of Chapter 7 – has done is increase paperwork and filing expenses for people already short on cash.

Nine out of 10 of those surveyed said the law has simply increased the costs of bankruptcy with no other benefits.

“The bankruptcy law changes were premised on the faulty assumption, promoted by the credit card industry, that there was massive abuse going on by thousands and thousands of people who could pay their debts,” says Henry Sommer, president of the NACBA. “In reality, the vaunted means test of the new bill has revealed that the creditors lobby was dead wrong – virtually none of the people who file Chapter 7 cases are able to pay more.”

Full survey findings can be viewed at www.thehastingsgroup.com.