It wasn’t supposed to be this way. When Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act in 2005, the idea was to reduce the number of personal bankruptcy filings. This was to be accomplished by making it more difficult to qualify for a Chapter 7 bankruptcy for higher income debtors. The “means test” was introduced as the requirement that had to be met before a Chapter 7 could be filed. In actuality, however, most debtors seeking to file bankruptcy do indeed pass the means test, and are therefore not forced to file under Chapter 13 of the Bankruptcy Code.
Although the number of bankruptcy filings fell just after the Bankruptcy Bill of 2005 went into effect, the recent economic crises have driven the numbers up this past year in a big way. Chapter 7 bankruptcies filed from June 2007 to June 2008 totaled 934,009, an increase of more than 28 percent from the 727,167 petitions filed from the same period during the previous year.
I know you’re hurting, Orange County. But you’re not alone…
For more information: Personal Bankruptcies on the Rise
