Title: The New Bankruptcy Law. Information You Need To Know Before You File.
The new bankruptcy law is in effect, and the climate has
drastically changed for people who are considering bankruptcy.
In this article we will touch on some of the details of the new
law, and explain exactly how these new changes will affect you.
First, let's touch on the new counseling requirements. According
to the new law, you must complete credit counseling with an
agency approved by the United States Trustee's office before you
can file for bankruptcy under either Chapter 13 or Chapter 7.
Because this counseling is to decide whether you need to file
for bankruptcy, or if an informal payment plan would be a better
alternative for your situation. The counseling is mandatory for
everyone, even for people who know for certain that a repayment
plan is not what they want.
However, you are required only to join in the counseling; you do
not have to go with any repayment plans the agency recommends.
But if you are given a plan, you will have to present the plan
to the court with a certificate showing that you attended the
counseling before you can file for bankruptcy. Once your
bankruptcy case is over, you will have to attend another
counseling session focused on learning personal financial
management skills to complete your bankruptcy and erase your
Another major change that comes with the new law effects many
people who want to file chapter 7 bankruptcy. Under the old law,
most people filing could choose between Chapter 7 and Chapter
13, and most people chose Chapter 7. Because of the new law,
many filers with higher incomes will be prohibited from using
The first step in determining whether or not you can file for
Chapter 7 is to compare your current monthly income to the
median income for a family of your size in the state you live
in. In the context of the new law, your current monthly income
is not your income at the time you file, but your average income
over the last six months before you file.
Once you have determined your income, measure it against the
median income in your state. If your income is equal to or less
than the median, you can file for Chapter 7. If it is more than
the median, you must pass a requirement of the new law called
the means test. The means test requires you to determine your
amount of "disposable income" by subtracting different variables
from your current monthly income.
Yet another important change caused by the new law is that
lawyers may be harder to find, and possibly more expensive. The
new law has added many complex requirements to the process of
filing for bankruptcy that will make it more time consuming for
lawyers to represent their clients in bankruptcy cases. The end
result being that attorney fees for representation will
increase. Also, the amount of time that lawyers must put into
the new regulations has increased and it is likely that it may
be harder to find a lawyer that solely specialized in bankruptcy
in the future. Many experts are predicting that the stress of
these new requirements may drive some bankruptcy lawyers out of
the field completely.
Now that you know many of the changes the new bankruptcy laws
hold for your situation, be aware and file with care.
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