Bankruptcy law has undergone a number of changes in recent years. Most notably, the major credit card companies lobbied congress furiously in 2005 and, as a result, some major reforms were brought in. The bankruptcy code was changed and, in particular, who and how you go about declaring bankruptcy were matters that were altered. A common misunderstanding, however, is that, because of the changes to bankruptcy law, it is now an inaccessible option.
This is incorrect, however. Chapter 7 bankruptcy is still very much available to almost everyone it was available to prior to 2005. The biggest change to bankruptcy law back in 2005 was the introduction of the means test. The means test is designed to establish whether or not bankruptcy really is the only possible option for the applicant. Chapter 7 bankruptcy can eradicate all of your debts and offer a financial fresh start. For obvious reasons, the courts do not want to just hand out this type of relief at will to anyone. So anyone filing for chapter 7 bankruptcy, whose income is higher than the median for the state in which they are filing, will have to detail all assets, income and expenses and submit this information for the professionals to decide whether or not it will qualify that individual for chapter 7.
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If that individual is deemed not to quality, then they should file for chapter 13 bankruptcy, which enables them to form a repayment plan for all or part of their debts over a period of between 3 and 5 years.
The other change to bankruptcy law is that financial counselling is now mandatory for everyone declaring bankruptcy, as are financial management classes.
The changes have been said to make bankruptcy law complicated even for the professionals, so going it alone, without an attorney, is no longer a possibility.
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