Bankruptcy is still available to most Americans in financial difficulty. Creditors can be stopped and foreclosures can be prevented. Recent changes in the Bankruptcy Laws and the publicity associated with them has lead many to believe that Bankruptcy is no longer available as a means of avoiding unbearable debt. This is not true.
In 2005, Congress passed sweeping legislation, sponsored by the Consumer Credit industry, which changed the requirements for seeking Bankruptcy relief. The same Consumer Credit industry has used its massive advertising machine to churn out misinformation regarding the accessibility of the Bankruptcy Courts for Americans in financial difficulty. But Bankruptcy is not dead.
In fact, today, most Americans in financial difficulty can still use the Bankruptcy Courts for protection. There are two ways to establish your eligibility for a Chapter 7 Bankruptcy.
One way to establish eligibility for a Chapter 7 Bankruptcy is to show that the household’s income, for six months, is less than the national median income for the same size household (adjusted for each state). Of course, many households in America make less than the median income while a similar number make more than the median income.
For those households that make more than the median, there is a second test to establish eligibility for Chapter 7 Bankruptcy. However the second test is more complicated. The second eligibility test is based upon whether most of the household’s income is needed for the necessities of life. Many American households, today, use all of their income, and more, for the necessities of life. This second test, therefore, affords eligibility to many households which make more, sometimes much more, than the national median income.
We find that more than 75% of the individuals that consult with us regarding Bankruptcy protection are eligible under the 2005 Amendments to the Bankruptcy Code. This, of course, requires a careful analysis by an experienced Bankruptcy Lawyer.
Before the law was changed in 2005 many lawyers and paralegals dabbled in Bankruptcy. Today, many of those lawyers and paralegals will not. The State Bar of California, Board of Legal Specialization certifies the competency of Bankruptcy Specialists so that a client seeking the advice of a Bankruptcy Specialists can be certain that the chosen lawyer is competent to protecting their interests.
In these troubled financial times there is one portion of the Bankruptcy Code, which specifically affords protection for people under the threat of foreclosure. Chapter 13 of the Bankruptcy Code allows for homeowners to stop foreclosure proceedings and force their lenders to allow 60 months to pay back arrearages. This is just the relief that many American Households need.
Here too, the eligibility for a Chapter 13 Bankruptcy is something that should only be analyzed by an experienced Bankruptcy Lawyer. The specific financial facts for each individual must be review in determining whether Bankruptcy is a good idea. But, it is still available and makes good sense for many financially troubled Americans.
Bankruptcy is not dead but alive and well as a tool in the hands of an experienced lawyer to protect valuable assets and financial well-being.
Richard A. Brownstein One of only 105 lawyers in the State, Certified by the California Bar Association,
Board of Legal Specialization as a Bankruptcy Specialist.