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Personal bankruptcy increasingly complex since 2005 laws

The great recession that struck New Jersey and the nation has understandably resulted in financial hardships for many. Increased debts, foreclosed homes and job loss have made many consider personal bankruptcy as a means of finding a way to confront their financial problems. And bankruptcy can certainly be a great relief when it discharges overwhelming debts.

However, for some who have large amount of debts and lower amounts of disposable income, the cost of filing personal bankruptcy can be a seemingly insurmountable block to getting the relief they need. Since the revisions that were made in the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act, the filing process for bankruptcy has become increasingly complex, making it difficult for consumers to navigate.

The intent of the changes to the law was to make sure that those filing for bankruptcy legitimately needed to do so. This appears to have been minimally achieved, with 0.10 percent fewer individuals filing for bankruptcy protection last year than in 2004.

It's no secret that bankruptcy is a complex process with several rules and regulations that consumers are required to adhere to. With the help of a professional, however, many people find it is the right option for them. The most common personal bankruptcy to be filed is a Chapter 7 proceeding. This is true in New Jersey and across the nation. By filing for Chapter 7 relief, it may be possible to discharge most -- if not all -- of one's debts. There are, however, items such as alimony or student loans that typically cannot be discharged in a personal bankruptcy.

When people find that they have an overwhelming amount of debt that they cannot pay, it may be necessary to file for personal bankruptcy. The filing can offer relief that leads to a fresh start financially. This new beginning may offer the chance to recover from financial hardships that may have plagued countless people through no fault of their own during the seemingly never-ending recession.

Source: CNN Money, "Too broke to go bankrupt," Blake Ellis, May 7, 2012

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