It has become harder to go into personal bankruptcy, but the condition of not paying bills remains whether or not formal bankruptcy is filed. The changes in the bankruptcy code of 2005 have really not changed very much. The cost of going bankrupt has increased from the $1,000 range to now more like $1,500. This is not only because of additional paperwork, but also because those going into bankruptcy must receive debt counseling both before and after they file bankruptcy.

Reports from law offices around the country are that just as many, if not more people are inquiring about filing for bankruptcy, but less of these people are actually going through with it. When people find out that in many cases, now they make too much money to file a Chapter 7 bankruptcy (writing off non-secured debts) and now must go through a Chapter 13 bankruptcy, often they will not do the bankruptcy and try to just muddle through. There is no a means test, so a family of four, with an income over $65,000 in many states will be forced to sell their home, etc. in order to go through a bankruptcy.

Now, with the foreclosure today rate double of that of 2005, this situation can only get worse before it gets better. There are millions of Americans, who bought into the 2001-2005 real estate bubble. Their Adjustable Rate Mortgages (ARM) and the ARM with payment of Interest Only (IO) are now reaching the point in time that the payments are 50 to 100 percent higher. If the housing bubble was still you could refinance your home or buy a new home with an ARM mortgage, but now that option is out. They could get additional credit card loans but that is only a temporary solution that will make matters worse. The amount of bankruptcies in the period before the new law went into effect in October 2005 was huge.

People who are not able to pay their bills, and if they can not file for bankruptcy they just muddle through the best that they can. The large number going broke is in large measure the responsibility of the easy lending policy of the last five years. You can still get a credit card often even after filing for bankruptcy. The financial situation is a little bit out of control, not just for individuals but for the whole United States.