May 21, 2008
Discover What The New Bankruptcy Law Means To Your Bankruptcy Case.
For those consumers planning to file bankruptcy, new laws are in place that could make the process more difficult. These laws went into effect to help stop the abuses of the system. Prior to their establishment, consumers could file bankruptcy more often and with fewer questions as to why.
Yet, this does not mean that those who are suffering from extreme financial strain can't file bankruptcy. Rather, you'll need to match the requirements of the new law. If you have filed in the past, realize the process has changed significantly.
What's Income Have To Do With It?
If you have a high level of income, chances are good you could be forced to file Chapter 13 bankruptcy before filing Chapter 7. In Chapter 13 bankruptcy, the debts you owe are simply restructured to make the more affordable to pay monthly, but you will be required to pay them down.
The new laws require that some consumers who have an income over the median income to take a means test. This test is designed to evaluate the amount of disposable income you have, after allowed expenses and debt payments are removed. If your income is not enough to cover all expenses, then you will be able to file Chapter 7 bankruptcy (liquidation and discharge.)
What Counselor?
Another requirement of the new bankruptcy laws is the requirement that you'll need to work with a debt management counselor before you are able to file bankruptcy. The United States Trustee's Office has determined which consumer credit counseling programs are approved.
You'll need to work with them to first try to repay your debt. The counseling service is designed to help you see other solutions to bankruptcy. These counselors can help establish a repayment plan that could help you avoid filing. The court system will require that you show evidence of any plan that is put in place, and the effort you have made to follow it, before they will allow you to file bankruptcy.
In addition to this, should your filing process go through, you will also be required to take a personal finance management class. You will not be able to have the debts discharged until this certification of attendance of this class is presented to the court.
I Need An Attorney?
An attorney is always a good thing especially in cases where filing bankruptcy under this new law is required. But, the downfall here is that many attorneys have raised their fees. The process of filing bankruptcy has gotten much harder for them, and much more time consuming. Most attorneys have compensated by increasing the fees they charge.
In addition to this situation, the new bankruptcy law has put in place a number of requirements for the attorneys. The attorney now must sign a legal document stating the accuracy of all the information that you provide to them. They then have to do more investigating as well as spend more time on your case. That costs more.
There are other changes to the bankruptcy laws as well. For example, the number of allowed disposable income you'll be allowed to have to file Chapter 13 has decreased, meaning you'll need to live on less to file Chapter 13. Property is often valued differently as well. In some areas, requirements for the states have changed as well (for example, you may need to live in the state longer to qualify for using their filing laws.)
There is little doubt the process of filing bankruptcy is more challenging than ever, but it has also been one of the most successful ways to get a fresh start. It will continue to hold that value for consumers, but only those that have the ability to work through these requirements.
Filed under Bankruptcy by admin
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