Chapter 7 and Chapter 13 Bankruptcies can still be filed after the Bankruptcy Reform Act went into affect in October, 2005.
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Are your bills piling up and are creditors calling? Is Filing bankruptcy the answer for you?
The answer is yes. It was widely misunderstood that the new bankruptcy law would make it harder for someone to file bankruptcy. It has turned out, however, that this is not true.
The changes to the bankruptcy code that became effective in October, 2005 do not prevent most people from filing bankruptcy and discharging all or most of their debts. The major changes to the bankruptcy laws do not prevent you from filing bankruptcy, but do require you to receive financial counseling and pass a means test before you file bankruptcy. In other words, Bankruptcy is still an option for someone who has lost their job, has been laid off, or who has suffered a medical emergency causing them serious financial difficulty.
The new law in some ways is more beneficial because more assets are now protected, specifically IRAs and 401ks are exempt up to One million dollars.
The hardest cases I have now are ones where client’s have a lot of equity in their homes, but they cannot make the payments now because of rising interest rates. A chapter 13 bankruptcy used to be the answer to save a client’s home if they fell behind in their payments and are facing foreclosure, but now some of my clients just cannot make the payments anymore or catch them up. In these cases clients are walking away from their homes and filing chapter 7 bankruptcy discharging all their debts.