Chapter 7 is the most common type of bankruptcy, but did you know the eligibility and process have gone under some revision since its creation? If you’re considering filing for bankruptcy protection, you should be aware of the most current laws that contribute to a chapter 7 bankruptcy and what information is old hat.

There have been some significant changes made to bankruptcy law in the past decade. Some of these changes even affect the requirements for lawyers, which means it can be difficult to select a qualified attorney if you don’t know where to look. Some of these changes to Chapter 7 bankruptcies include:  

New Chapter 7 bankruptcy Laws

Eligibility restrictions- if your income is more than the median income for your state, you must pass the means test to file for a chapter 7 bankruptcy.

Required Credit Counseling- before you can file you must undergo credit counseling with an agency approved by the united States Trustee’s office.  Toward the end of your bankruptcy case, you will have to undergo another required counseling session.

Outdated Chapter 7 Information

Can Anyone File For Chapter 7 Bankruptcy?- No. If you make too much money you will have to file under a chapter 13 reorganization plan.

Property is valued at Auction Price- False. As of 2005, property is now valued at replacement cost. This means that your property may be liquidated and sold by the trustee during the bankruptcy process.

It’s important to speak with a bankruptcy attorney that’s experienced with the new bankruptcy laws. Call 800-260-1402 and get a free case evaluation.

Chapter 11 Filing Comes Just One Week After Small Business Lender CIT Group’s Bankruptcy

In a time where bloated banks and businesses are antagonized for deflating the economy, small businesses are the steadfast champion of the people for creating jobs and improving communities. 

Small businesses everywhere feel the grunt of strapped credit so much that the majority of small business owners adamantly protested the new health care bill for being too “costly”: the act is less political than it is a mode of survival.

Now one of the last dependable small business lines of credit has depleted, as lender Advanta Corporation has filed for Chapter 11 bankruptcy.  As debtor defaults rose, Advanta was symbiotically stricken, which caused them to cut off 1 million accounts.  Advanta even hiked up their interest rate to 25%, stretching their loan holders’ paper thin monthly budgets even tighter.   

Though the small business credit provider might not be considered in the same breath as “too big to fail”, it is one of the largest credit providers to seek bankruptcy protection.  Its write-offs this June were 56.95%, which is massive compared to the industry standard of 10.73%,, with 24% of their loans defaulting.

Advanta’s bankruptcy will obviously have a huge impact on small business lines of credit, but will it cause their subsequent bankruptcy as well? Advanta’s spokesperson predicted the small business credit line would be back on its feet within a few months.  A Chapter 11 bankruptcy does not necessarily spell imminent collapse under normal circumstances, but Advanta’s $363 million capital falls just a hair short of federal regulations.  Advanta’s bankruptcy will still be treated as a Chapter 11 reorganization bankruptcy, but maneuvered by the hands of an FDIC receivership.

Small business bankruptcy has risen 44% in the third quarter, compared to small business bankruptcy filings a year ago.  Credit defaults tend to match the unemployment rate head to head, now at 10.2%.  For the individual just struggling to get by, credit survival is a vicious cycle.  When defaults rise, so do interest rates.  If you are already knee deep in debt there is a solution; talk to one of our attorneys today to find out how a bankruptcy filing can defend you from the unexpected.   Call us toll-free at 1-800-260-1402 for a free bankruptcy consultation today.

Individuals who have filed for bankruptcy in the past consider rebuilding their credit an immediate priority, as a bankruptcy remains on one’s credit report ten years after a Chapter 7 personal bankruptcy and seven years following a Chapter 13 personal bankruptcy. 

A huge percentage of these individuals have probably turned to the widely marketed “Freecreditreport.com”, owned by the credit bureau Experian.  Freecreditreport.com corners its visitors into a monthly subscription fee and the false information that one needs to check their credit score like their e-mail, though a government task force argues that it changes gradually and should only be checked yearly, for free—even if you’re recovering from a bankruptcy on your credit score.

Battles against big credit card companies and big banks that give bad mortgages and drive their consumers into bankruptcy will soon be spearheaded in a proposed Consumer Financial Protection Agency.  The CFPA agency, considered a priority legislation to be passed, will be headed by none other than consumer bankruptcy expert and Harvard Law graduate Elizabeth Warren.  For decades, Warren has fought to remove the stigma that bankruptcy filings are a result of excessive consumer spending by defending the way they tend to follow divorce and misfortune.  She pledges to defend the plight of so many middle class families, an entity that has been on a steep decline since the bankruptcy expert co-authored the study “the Fragile Middle Class” in 2000.

Many people have high hopes that Elizabeth Warren will defend the common consumer in the forthcoming Consumer Financial Protection Agency.  While one cannot predict whether these watchdogs will diminish the unexpectedly high bankruptcy filings of 2009, one can always turn to bankruptcy for an automatic stay from the hungry creditors. 

If you’re concerned that a foreclosure will leave you homeless or a creditor lawsuit will take the clothes off your back, a bankruptcy can help protect you.  The attorneys at Legal Helpers can help you maneuver through bankruptcy and prevent you from losing the essential things in the process.  Call us for a free initial consultation, available 6 days a week toll-free at 1.800.260.1402.