Is it harder to file for bankruptcy than it has been in the past?
Not necessarily harder, but it can be more expensive -- so much so that, ironically, some people who should file for bankruptcy cannot afford to do so.
That’s because the legal fees for one popular type of bankruptcy -- Chapter 7 -- must be paid in full before the case is filed because a lawyer can no longer be one of the bankrupt’s creditors.
Moreover, effective Oct. 17, 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) made significant changes in bankruptcy procedure including 1) a means test for Chapter 7 filing, and 2) credit counseling within 180 days of filing for bankruptcy.
People who once found relief in the simpler Chapter 7 bankruptcy -- the
"liquidation bankruptcy" -- now often find it necessary to file under the more costly and more difficult Chapter 13 bankruptcy -- "reorganization of debt."