The New Bankruptcy Laws Make it More Difficult to File Chapter 7 Bankruptcy
The most recent changes to bankruptcy laws might cause it to be more challenging for you to file bankruptcy. If you're in a higher income bracket you'll no longer be allowed to utilize Chapter 7 bankruptcy. Instead, you'll have to file under Chapter 13 bankruptcy and pay off at least a few of your creditors. If you would like to file bankkruptcy, you must take part in credit guidance prior to filing. You're also required to go to additional counseling in the area of budgeting and debt management. The extra counseling is a prerequisite to acquire a release of your debts. And, since the law imposes new demands on attorneys, you might have a tougher time getting a attorney to accept your bankruptcy case.
Limited Eligibility for Chapter 7 Bankruptcy
Under the older bankruptcy laws, you were permitted to select the type of bankruptcy that seemed best for you. In most all cases that would be a Chapter 7 bankruptcy liquidation rather than a Chapter 13 bankruptcy repayment. But, if you're in a high income bracket, the new bankruptcy laws won't allow you to use Chapter 7 bankruptcy.
To find out whether you're able to file Chapter 7 bankruptcy under the new bankruptcy laws, you must first evaluate your "current monthly income" against the median income for a family unit of your size in your state. If your income is lower than or equivalent to the median, you'll be able to file for Chapter 7 bankruptcy. If it's more than the median, however, you must pass a new test to file for Chapter 7 bankruptcy. The other test is known as "the means test."
The intention of the means test is to see whether you have adequate free income, after taking off certain permitted expenses and mandatory debt payments, to make payments on a Chapter 13 plan. To determine whether you pass the means test, you deduct certain permitted expenses and debt payments from your current monthly income. If the money that's left after these computations is below a certain sum, you'll be able to file for Chapter 7.
Counseling Prerequisites
Prior to filing for bankruptcy under either Chapter 7 or Chapter 13, you must complete credit counseling with an agency sanctioned by the United States Trustee's office. The reason for this counseling requirement is that it assists you in determining whether you actually want to file for bankruptcy or whether an informal repayment plan will help you reclaim your financial stability.
Counseling is necessary even if it's evident that a repayment plan isn't workable for you. You're required merely to participate in the counseling. You don't have to go along with any repayment plan the agency proposes. Even so, before you'll be able to file bankruptcy, you'll have to introduce any repayment program the agency offers along with a certificate showing that you finished the counseling.
Toward the conclusion of your bankruptcy suit, you'll have to go to a different counseling session. This counseling session is fashioned to teach you personal financial management skills. You can't obtain the discharge that wipes out your debts until you deliver proof to the court that you completed this requirement.
Lawyers May Be Harder to Locate -- and a Lot More Pricey
The new bankruptcy laws do add numerous complicated requirements to bankruptcy filings. Some of these brand-new requirements impose more duties on attorneys leading to bankruptcy cases being more time intensive. Among the major new demands on lawyers is that they must now personally ensure the accuracy of all the info their clients give them. That extra demand means that attorneys must spend significant amounts of time on every bankruptcy suit. Thus, they'll charge more to handle each bankruptcy suit. The new bankruptcy law requirements have actually squeezed a few bankruptcy attorneys out of the field totally.
Some Chapter 13 Filers Will Learn to Survive on Less
When you filed Chapter 13 bankruptcy under the previous bankruptcy laws, you had to dedicate all of your available income to your repayment plan. The old bankruptcy laws defined usable income as that which you had leftover after paying your actual living expenses. The new bankruptcy laws have changed this computation. While you still must hand over all of your disposable income, if your income is greater than the median in your state, you don't get to figure your available income based on your real expenses. Instead, you have to calculate your spendable income using allowed expense sums prepared by the IRS. And these allowed expense numbers must be deducted from your average income during the six months before filing bankruptcy, not from your pay every month.
More Changes
There are more modifications that can impact you negatively if you're filing or planning on filing bankruptcy. Do your research on the new bankruptcy laws and make sure you know the impact they have on your bankruptcy filing. - 15224
The most recent changes to bankruptcy laws might cause it to be more challenging for you to file bankruptcy. If you're in a higher income bracket you'll no longer be allowed to utilize Chapter 7 bankruptcy. Instead, you'll have to file under Chapter 13 bankruptcy and pay off at least a few of your creditors. If you would like to file bankkruptcy, you must take part in credit guidance prior to filing. You're also required to go to additional counseling in the area of budgeting and debt management. The extra counseling is a prerequisite to acquire a release of your debts. And, since the law imposes new demands on attorneys, you might have a tougher time getting a attorney to accept your bankruptcy case.
Limited Eligibility for Chapter 7 Bankruptcy
Under the older bankruptcy laws, you were permitted to select the type of bankruptcy that seemed best for you. In most all cases that would be a Chapter 7 bankruptcy liquidation rather than a Chapter 13 bankruptcy repayment. But, if you're in a high income bracket, the new bankruptcy laws won't allow you to use Chapter 7 bankruptcy.
To find out whether you're able to file Chapter 7 bankruptcy under the new bankruptcy laws, you must first evaluate your "current monthly income" against the median income for a family unit of your size in your state. If your income is lower than or equivalent to the median, you'll be able to file for Chapter 7 bankruptcy. If it's more than the median, however, you must pass a new test to file for Chapter 7 bankruptcy. The other test is known as "the means test."
The intention of the means test is to see whether you have adequate free income, after taking off certain permitted expenses and mandatory debt payments, to make payments on a Chapter 13 plan. To determine whether you pass the means test, you deduct certain permitted expenses and debt payments from your current monthly income. If the money that's left after these computations is below a certain sum, you'll be able to file for Chapter 7.
Counseling Prerequisites
Prior to filing for bankruptcy under either Chapter 7 or Chapter 13, you must complete credit counseling with an agency sanctioned by the United States Trustee's office. The reason for this counseling requirement is that it assists you in determining whether you actually want to file for bankruptcy or whether an informal repayment plan will help you reclaim your financial stability.
Counseling is necessary even if it's evident that a repayment plan isn't workable for you. You're required merely to participate in the counseling. You don't have to go along with any repayment plan the agency proposes. Even so, before you'll be able to file bankruptcy, you'll have to introduce any repayment program the agency offers along with a certificate showing that you finished the counseling.
Toward the conclusion of your bankruptcy suit, you'll have to go to a different counseling session. This counseling session is fashioned to teach you personal financial management skills. You can't obtain the discharge that wipes out your debts until you deliver proof to the court that you completed this requirement.
Lawyers May Be Harder to Locate -- and a Lot More Pricey
The new bankruptcy laws do add numerous complicated requirements to bankruptcy filings. Some of these brand-new requirements impose more duties on attorneys leading to bankruptcy cases being more time intensive. Among the major new demands on lawyers is that they must now personally ensure the accuracy of all the info their clients give them. That extra demand means that attorneys must spend significant amounts of time on every bankruptcy suit. Thus, they'll charge more to handle each bankruptcy suit. The new bankruptcy law requirements have actually squeezed a few bankruptcy attorneys out of the field totally.
Some Chapter 13 Filers Will Learn to Survive on Less
When you filed Chapter 13 bankruptcy under the previous bankruptcy laws, you had to dedicate all of your available income to your repayment plan. The old bankruptcy laws defined usable income as that which you had leftover after paying your actual living expenses. The new bankruptcy laws have changed this computation. While you still must hand over all of your disposable income, if your income is greater than the median in your state, you don't get to figure your available income based on your real expenses. Instead, you have to calculate your spendable income using allowed expense sums prepared by the IRS. And these allowed expense numbers must be deducted from your average income during the six months before filing bankruptcy, not from your pay every month.
More Changes
There are more modifications that can impact you negatively if you're filing or planning on filing bankruptcy. Do your research on the new bankruptcy laws and make sure you know the impact they have on your bankruptcy filing. - 15224
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If you're thinking about bankruptcy, visit The Bankruptcy Law Info Center, and snag a copy of The New Bankruptcy: Will It Work for You?
