I love to tell bankers “I told you so.” It just gives me such great satisfaction. And today I’ve got another reason to rub their face in it. It appears that the very bankruptcy reform the creditors fought so hard to shove down the throats of consumers in the early 2000 years had now come back to bite them on the butt.

Before bankruptcy reform, consumers could file Chapter 7 bankruptcy and discharge their unsecured debt and be able to save their homes from foreclosure. Combined with a Chapter 13 bankruptcy, this approach was known unofficially as a “Chapter 20”. Get it, 7 + 13 = 20.

But since the creditors changed the bankruptcy code after intensive lobbying and “campaign contributions” on Capital Hill, the creditors were laughing. They thought they had successfully bought themselves new legislation that would prevent the relatively small percentage of the US population that needed financial relief, for getting a fresh start in bankruptcy.

Instead, under the bankruptcy reform of 2005, consumers now have a harder time in seeking protection in Chapter 7 and they have fewer options for dealing with saving their homes from foreclosure and working out a satisfactory repayment plan.

The recent debacle of the sub-prime loan meltdown and mortgage interest which continues to adjust, even though the paychecks don’t, has left many consumers in a situation where instead of working out a modified repayment plan they are just walking away from the house.

So what improved for U.S. consumers as a result of bankruptcy reform in 2005? Not a damn thing. The cost of a Chapter 7 bankruptcy, which is now more time consuming and complicated, has gone from the $700 to $1,200 range to the $1,400 to $2,400 range. That fee estimate does not include the $100 or so that debtors must now pay for a worthless and needless pre and post bankruptcy credit counseling session.

The bankruptcy reform of 2005 did had some winners, but none of them were consumers getting treated better by creditors. Consumers aren’t asking for a handout or wanting to walk away from their debt. In fact, most people actively seek to repay what they can afford but because creditors didn’t and don’t offer fair and reasonable repayment plans, bankruptcy was often a better option.

American consumers that go bankrupt are not losers and rejects, just people that didn’t have enough money to grease the skids on Capital Hill and buy a new bankruptcy law that is now putting egg on the faces of creditors.