Increase In Chapter 7 Filings

New Jersey bankruptcy attorneys are busier than ever trying to process the increase in bankruptcy filings. It is rather unfortunate that when New Jersey bankruptcy attorneys are the most successful when the economy is at its worse. New Jersey bankruptcy attorneys saw an all time record high in 2005 just before new bankruptcy legislation was implemented. In October of 2005 the Bankruptcy Abuse Prevention Consumer Protection Act took effect. This act was the largest change in bankruptcy legislation in the last 50 years. It was created to prevent the abuse of bankruptcy as an option to consumers as well as to protect the consumers who file for bankruptcy. In order to accomplish this goal, legislation had to be stricter in order to discourage the abuse of individuals that do not necessarily need it. This was the cause for requiring a greater burden of proof than in the past. Potential filers would have to completely expose themselves and their financial histories. The claims of filers would have to be substantiated by physical paperwork and documentation. Certain standards had to be met and a means test was required. It was more difficult to qualify for a chapter 7. This is why some opted for a chapter 13. Under a chapter 13, you were still held accountable for the debt that you amassed; you were just provided more flexible payment terms, usually three to five years to repay your debt. In addition, any assets, land or property, that you had were protected.

Because many Americans were fearful that the new act would make filing for personal bankruptcy so difficult that it would almost be impossible, there was a mad rush to file for bankruptcy prior to the implementation of the Bankruptcy Abuse Prevention Consumer Protection Act. Since then, the number of chapter 7 bankruptcies has increased to prove that the new standards, while tougher, are not impossible for potential filers.



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