This article Banks Feast on Bankrupt Consumers, speaks about how the credit card industry and banking lobby pushed through the 2005 bankruptcy reform act. The bankruptcy reforms enacted by Congress, were heavily pushed by the credit card industry in response to the "perception" that consumers should not be able to walk away from their credit card debts in a Chapter 7 liquidation Chapter 7. The "trap" that the banks lobbied for was to put more middle class consumers into a Chapter 13 repayment plan over five years ((Chapter 13 with an Chicago Bankruptcy Attorney)). The Chapter 13 that the banks lobbied for was an automatic five year repayment plan based upon the means test which is your "average income in your state for the size of your household (or an average of the person income over the last six months from all sources to come up with the persons "income" if that number is over the median income you are "presumed" to have to do a Chapter 13, but you go through "the full means test" then only deducting hypothetical census bureau standard living expenses in your area and/or "other legitimate expenses" that Congress believed were "appropriate" under the test).

There are some major points that the article makes that I believe are very important and noteworthy.

1) The 2005 bankruptcy reform did slow the rash of filing for bankruptcy for a couple of years. ( you can look at the filings at the ABI and they did in fact decrease significantly)
2) Americans are saddled with more debt than ever and their incomes have dropped significantly in this "downturn" although more people are now saving
3) Chapter 7 Filings have now increased to pre-2005 levels

The last point number three is the most important thing to focus on here. Number three is important because Chapter 7 bankruptcies generally only will increase after the 2005 change of law if two things are true 1) middle class or upper middle class consumers are not making more than the median income in the state and are then eligible for a Chapter 7, and 2) the filer has very little or no assets to protect and then they are then eligible for a Chapter 7. This means that those Chapter 7 filers if they are "middle class" generally are either out of work or have had a reduction of income and have little or no savings to protect. Generally most economists will agree that for our economy to improve consumers must spend money and the middle class consumer must be economically sound. Every day our office sees the "downturns" casualties, from all walks of life. It seems that everyone is struggling at this point and everyone is worried about losing their job.
I am a Chicago Bankruptcy Attorney, who is here to help you when you are struggling with insurmountable debt and a potential or actual job loss. I am an experienced Chicago bankruptcy lawyer who represent the struggling consumers who are living paycheck to paycheck struggling to pay their bills. Whether it is a lose of a job or reduction in income, divorce, medical debt, or just crushing debt I am here to help you navigate through the process of bankruptcy and we are here to answer your questions.

If you have a garnishment we can stop the deduction with the filing of either type of bankruptcy. If you are in foreclosure a Chapter 13 will stop the foreclosure. My consultation is free, and we will be sure to give you all of your options which include not filing a bankruptcy. I want you to lose your debt and keep your dignity! Please call my office today for a free consultation at 312-489-8182!

Marc Wagman

Attorney at Law