In March of 2005, Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act, which was quickly signed into law by President Bush. The goal was to reform the bankruptcy system as we know it by making filing more difficult to accomplish and less favorable when it was. In practice this essentially meant that consumers had to jump through more hoops before they could declare, and if they did, more of them would be forced to file Chapter 13 bankruptcy instead of Chapter 7.

Why Chapter 13 Instead Of 7

The reason for this was simple: in Chapter 13, you are obligated to pay off some or all of what you owe your unsecured creditors from your monthly disposable income, which is decided by the courts. In a Chapter 7 bankruptcy in Connecticut and most states, on the other hand, creditors were oftentimes left with nothing. This being the case, the new bankruptcy law mandates that consumers whose income exceeds the median income of similarly sized households in Connecticut must pass the bankruptcy means test in order to claim Chapter 7. As of 2006, here are the median income figures for the state:

2-person families: 66,972
3-person families: 76,786
4-person families: 93,821
5-person families: 93,970
6-person families: 91,105
7-or-more-person families: 91,371

For people who have failed to pass the means test and considering Chapter 13, they are normally left asking themselves, “Why scar my credit if I am going to pay most of the debt back anyway?” This is an important question to ask, especially since there are companies that help people deal with their consumer debt without the same long-term credit implications as a bankruptcy. One of the leading debt solutions that consumers in Connecticut are turning to is debt settlement & negotiation.

In this type of program you can actually reduce your debt amount, not just your interest rates. Because the savings are so significant, it is the fastest way to clear debt besides Chapter 7 bankruptcy.

Bankruptcy Figures In Connecticut

2004: 11,291
2005: 15,116
2006: 4,086

Connecticut, like most other states, saw a dramatic decrease in the number of personal bankruptcy cases following the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). In fact the number of a Connecticut consumers filing either Chapter 7 or Chapter 13 Bankruptcy decreased by more than 70% between 2005 and 2006. As a result many more consumers are turning to options like debt settlement or consumer debt counseling. To get started, submit a form today!

Or you can feel free to browse some other Connecticut-related debt topics:

Connecticut Consumer Credit Counseling Services
Connecticut Bankruptcy Laws
Connecticut Debt Collection