Chapter 7 only increased after the bankruptcy laws changed claims Beach Park bankruptcy attorney. The current economic climate at the time of the reform was that there were no jobs, we were in a recession, people were hurting financially and people were tapping into their credit cards to get by and pay their living expenses.
What happened was the cost of filing Chapter 7 bankruptcy increased for a debtor after the law changed. That increase in cost is probably the most significant results of the bankruptcy law change. Bankruptcy was still available. Bankruptcy was still readily available through a qualified bankruptcy attorney. Bankruptcy was still a process that one could navigate through and get a fresh start. The real change was that the cost went up because the requirements to file a Chapter 7 and the amount of work that had to be put on the debtor and the debtors counsel increase.
For example, there is a new means test that takes place if someone is over the state median in terms of income in their state for their family size. This has now become part of the bankruptcy basics. If someone is borderline Chapter 7/Chapter 13, this means test has to be satisfied for someone to get into a Chapter 7. In certain circumstances, there are a small percentage of people who might have been able to file a Chapter 7 under the old law who no longer can file under the current law based upon their income.
However, people know how to take advantage of the existing laws to satisfy what they are trying to do. There is a six month look back. In terms of income to determine whether or not somebody qualifies under Chapter 7. The new law privet definitely prevented somebody who was gainfully employed from filing a bankruptcy under Chapter 7 immediately upon becoming unemployed. And that makes sense, because that person does have the ability to get back on their feet and probably get income similar to what they had before and they are not entitled to a fresh start. However, other people simply took advantage of the existing law and laid low for six months prior to filing a Chapter 7.
So there’s always a way around the law if somebody wants to be creative. I would never recommend that somebody does this but I’m sure it happens throughout the country where someone will wait out the six-month period until such time that they fall below that means test and qualify for Chapter 7. For more insight into filing for bankruptcy, contact a local bankruptcy lawyer to assist you.