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Becoming A Hostage To The System After Filing Bankruptcy

Originally, the bankruptcy code was created to give the honest but unfortunate debtor a second chance and a fresh start. These are concepts developed by the American legal system that most people believe in still today. The bankruptcy code was never designed to be oppressive and hurt the debtor’s financial recovery. Recently, since the changes to the bankruptcy code 2005 it seems that for some the incentive to work hard and create wealth has been taken away. Bankruptcy, by design was to give debtors an opportunity to positively move forward, regaining their productivity, while putting the past behind far them. This is what the fresh start from filing bankruptcy was all about.

When Congress made these changes to the bankruptcy code in 2005, the real estate market was running wild alongside the stock market and it seems that nobody could lose money. A few years after this, it  happened to many individuals that were counting on their real estate investments for their future were having to file for bankruptcy and get out. Not only was the real estate market hit, but beginning in 2008 the stock market began to fall wiping out many Americans 401(k)s and IRAs. With all these changes to the bankruptcy code it made it much tougher for an individual to file bankruptcy under Chapter 7, forcing them to file Chapter 13 bankruptcy instead. Now because of being forced into Chapter 13 bankruptcy, the debtor’s found themselves trapped paying back debts that they couldn’t afford in a Chapter 13 bankruptcy payment plan.

Don’t get me wrong, filing for bankruptcy offers a lot of solutions for debtors that are facing legal challenges from their creditors. What is frustrating though, is when everything hit its lowest in 2009, what happened to the bank and Wall Street executives that caused the problem. They were bailed out by the taxpayer and went on their way.

With the new changes to the bankruptcy law, Chapter 13 has become a bankruptcy filing where every penny is scrutinized by the trustee. This gives no incentive for the debtor to work harder because any disposable income can be taken and given to the creditors. Basically, the Chapter 13 bankruptcy filer, becomes a hostage to the bankruptcy filing system. That’s why if it’s at all possible, it’s best to file Chapter 7 bankruptcy and be completely done when you get your discharge.

Filing for bankruptcy in the US is still probably the best system in the world. It’s best to use a bankruptcy attorney to get the most out of bankruptcy filing. A bankruptcy attorney knows the ins and outs of the code and be able to protect the maximum amount of the debtor’s property possible.

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