In life, we all go through changes. In the 1990's, the economy was good and Bill Clinton was our president. According to a lot of people, he managed to get this country out of debt. Back then, the bankruptcy rate was very low. After George Bush became our president and ran for a second term, this economy went down. Most of the people I associate with have parents who are struggling to make ends meet and have been forced to file for bankruptcy. Research shows that throughout the years, the rate for bankruptcy has tripled.
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Whether or not you know, there have been some changes to the bankruptcy law. This law is known as the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. You don't have to memorize the name of this law, all you have to be aware of is that this law makes the bankruptcy process more intricate, but most of the people who qualified before will still qualify for it.
The major change to the process is the bankruptcy means test. The reason you have to take this test is to prove that you cannot pay all your bills without filing bankruptcy. The people who make a decent amount of money can only file chapter 13 bankruptcy, which does not take away your bills; it only lets you make new payment arrangements.
The whole purpose of taking this test is to make sure that only the people who are really struggling are getting the financial help they need. This new law also has new credit counseling and money management classes. This is a great benefit because these classes will teach people how to properly build their credit and prevent future hardships.
You also have to file taxes and make them available to your creditors if they want it. This is another form you will have to fill out for bankruptcy eligibility. The attorney fees have gotten higher and the law has added more steps to the process. This means your lawyer might be tied to his or desk longer than desired. Unfortunately, you cannot neglect to prepare as much as you possibly can before going to the bankruptcy law office. If you have a lot going on and you're one of those people who is very forgetful, write yourself a reminder and put it on your refrigerator. That way, your lawyer's workload will get lighter and you can get your affairs in order in a timely fashion.
The fact that Congress decided to make these changes to the bankruptcy law shows that this is a big problem that needs to be addressed. The new changes make people want to double check their status before they decide to go this route and possibly find alternative ways to pay back loans and adjust your finances.
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