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Filing Bankruptcy Is Still Possible Following The Strict 2005 Changes

May 09, 2012 | Comments: 0 | Views: 146

As Americans continue to struggle with a difficult economy, many people are turning to filing bankruptcy as a way out of overwhelming debt. Prior to 2005 and the bankruptcy code changes most people filed Chapter 7 bankruptcy. However the 2005 changes have made it more difficult for individuals to qualify to file mostly due to previous abuses. Now individuals must meet the median income guideline for their state or else they will not qualify to file Chapter 7 Bankruptcy. In a nutshell, if an individual's income is too high then they will not qualify for Chapter 7 but instead be forced into a Chapter 13 bankruptcy. This allows people who are truly struggling financially to get rid of choking debt and not just take advantage of the system.

The prior bankruptcy law allowed individuals to run up their credit card debt, purchase cars, luxury items such as jewelry or expensive clothing, take expensive vacations, and receive cash advances or payday loans just prior to filing Chapter 7 Bankruptcy. This was very unfair for the creditors who were stuck with debt that was accumulated by individuals who calculated their purchases just before they "decided" to file bankruptcy due to their inability to pay back the debt. Other abuses that occurred were poor investments and badly managed finances by individuals that thought that they had nothing to lose by walking away from the debt since there was no real accountability by the bankruptcy courts.

People who may legitimately qualify For Chapter 7 due to the aftermath of a bad economy such as job loss, high gas prices, skyrocketing inflation, or maybe a major illness, may find it more difficult to qualify themselves due to the changes brought about by the misuse of the system. Forcing someone like this into a Chapter 13 may be setting them up for failure. The good news in all of this is that filing bankruptcy remains our legal right and should be entered into with the assistance of an experienced bankruptcy attorney. A bankruptcy attorney can asses an individual's personal financial situation and determine if they qualify to file and which chapter of bankruptcy best suits their client's needs. Sometimes all it takes is for the proper timing to file and that will make the difference as to whether an individual qualifies for Chapter 7 Bankruptcy. An experienced bankruptcy attorney will know all the ins and outs of the legal system and will be able to get the best possible results for their client after thoroughly assessing their income, liabilities, property, and personal assets.

The author is a professional that formed FilingBankruptcyPros.Com which provides information for debtors considering filing bankruptcy under Chapter 7 and Chapter 13 bankruptcy and helps individuals stop foreclosure and eliminate their debt by putting them in touch with a local bankruptcy attorney.

Source: EzineArticles
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