"Too many people have abused the bankruptcy laws," President George W. Bush said as he signed the measure into law. "They've walked away from debts even when they had the ability to repay them."
But Lawless, citing studies, said the revisions mainly confused legitimate filers and led to higher attorney fees.
"The effect was that people are arriving in Bankruptcy Court in worse financial shape," he said.
U.S. Bankruptcy Court Judge Maureen Tighe, based in the Woodland Hills division, said the more complex rules ultimately stopped few bankruptcies.
"The changes just made it more expensive for people to file," she said.
The 2005 revamp immediately cooled the bankruptcy frenzy.
In 2004, about 60,300 people sought Chapter 7 or 13 bankruptcy in the district, which covers Los Angeles, Orange, Riverside, San Bernardino, Ventura, Santa Barbara and San Luis Obispo counties. In 2006, the first full year under the new rules, about 17,600 people filed, down 71% from two years earlier.
Nationwide, filings fell less dramatically, 61%, to 612,000 in 2006 from 1.6 million in 2004.
Before long, filing rates were rising again as more and more people were resorting to bankruptcy. Last year, about 65,000 Southern Californians filed, sailing past the 2004 level.
The typical consumer bankruptcy filer isn't a scofflaw, Harvard University law professor Elizabeth Warren said.
"They have decent educations and they once had good jobs," said Warren, whose public profile has soared recently as chairwoman of the congressional panel monitoring the Treasury Department's distribution of bailout money through the Troubled Asset Relief Program.
"Nearly all of them are shocked that play-by-the-rules people like themselves have ended up in bankruptcy," Warren said.
The reason most turn to bankruptcy strikes close to home.
"It's real estate," said Encino bankruptcy attorney David S. Hagen, who conducts free seminars for homeowners organized by the nonprofit Neighborhood Legal Services.
"People got sold a bill of goods on some kind of nontraditional mortgage and thought they could change it when the worth of their house went up. But the worth went down and the payments went up," he said. "They start to live off of their credit cards."
By the time Norris Daniels of Sherman Oaks made it to the self-help desk staffed by Neighborhood Legal Services at the Woodland Hills Bankruptcy Court division, he had racked up $47,000 in credit card debt.
