Chapter seven bankruptcy was made more difficult to file.The means test was introduced and the government had to be satisfied that the individual was earning less than the average income in the state in which he or she resides. Of course, there are many other variables and factors to be considered.Yet, the overall effect was that chapter seven bankruptcy became a lot more difficult to obtain. Further, the time gap between two bankruptcies was increased. This meant that an individual could not exercise this option for the next 8-10 years having chosen it once. Further, the emphasis was shifted towards chapter thirteen bankruptcy where the lenders, the borrowers and the court sit together to arrive at a mutually beneficial plan. It invariably involves a lot of financial hardship on the individual as maximum effort is made to repay the debts to the fullest. In such a scenario, it is hardly surprising that debt settlement is more popular. If that is the case, why is it that more than three million bankruptcies have taken place in America in the past 3 years? Well, unsecured debt was the primary reason why we will file for bankruptcy. Debt settlement is the best option available to those who are facing excessive card problems. However, when the recession first began, lenders were simply not prepared to offer any scope for negotiations. They tried the same old tactics and expected to succeed.The credit card issuers decided to insist on full and final repayments instead of any significant discounts. It was only after the government stepped in and a lot of damage was done before the credit card issuers realize that this recession was going to be different.
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