Changes Recently Made To The Bankruptcy Process
If you file for a bankruptcy, you must first pay a filing fee. This amount will help fund the processing of your bankruptcy case. Sometimes these fees will increase to accommodate changes in the bankruptcy process or even inflation. Recently the filing was increased, and this affects those who plan to file for both Chapter 7 or Chapter 13 bankruptcy.
As of November 1, 2011, bankruptcy fees have been increased. For Chapter 7 bankruptcy filing, the fee went from $299 to $306. For those filing for Chapter 13 bankruptcy, the fee went from $274 to $281. While it might not seem like a huge increase, it is important to be aware of the fees associated with bankruptcy as well as changes in the overall process.
Chapter 7 bankruptcy proceedings have incurred one of the biggest changes. The largest change this year for those who file personal bankruptcies is the change in income requirements for those who file for this specific type of personal bankruptcy.
The changes occurred because the U.S. Congress believed that some citizens were abusing the bankruptcy process and filing for Chapter 7 when they had enough money to instead file for Chapter 13. In a Chapter 13 bankruptcy, the debtor must pay off as much unsecured debt as possible during the bankruptcy process. In Chapter 7, however, unsecured debt is basically wiped away and these debts are cleared away. The concern of Congress was that by filing for Chapter 7, even though the individual might have a high enough income to file Chapter 13, some creditors would not receive any payments for the debts incurred by the filer.
As a response to this concern, a new requirement was put into the bankruptcy code to prevent individuals above the median income for a family of their size in their geographic area from filing for Chapter 7. This law requires the government to determine a standardized median income number. Then, individuals who apply for Chapter 7 bankruptcy must show that they make less than that number.
While this might seem to make sense, our current poor economy has meant that many people have suffered from a reduction in income. Because of these mass income reductions, the median income in most areas also has dropped. So, for those who might have been just below the median income requirement a couple of years ago, they will have to make even less to qualify for a Chapter 7 bankruptcy now.
Unfortunately, this means that many Americans will not be able to file for bankruptcy. Chapter 7 is often appealing because is an easier process and less expensive, so for those who are truly struggling, it can be a way to start over. Chapter 13, on the other hand, is a much longer process, is more difficult and can be much more costly.
Emely Peight likes blogging about bankruptcy issues. For further bankruptcy process information or for Phoenix bankruptcy help, or if you need a Phoenix bankruptcy attorney, please visit these bankruptcy websites today.
