Many people find themselves in such severe financial circumstances that bankruptcy may be the only way out for them. However, because of the new bankruptcy law, many have made a false assumption that bankruptcy has been eliminated by the government.
Bankruptcy is still a viable option, but there are some new rules that you should be aware of. The biggest change in the bankruptcy law is something called the means test.
There's much controversy about whether the new law is bad for consumers. It seems to have come about because of extensive lobbying from the credit industry in recent years, and Congress finally passed this law in 2005.
Essentially, this law tries to make it more difficult for someone to file for bankruptcy, specifically chapter seven bankruptcy where most of your debts are completely wiped out. The new law was passed in 2005, and one of the main provisions was the means test. This test tries to determine whether or not you can actually pay your debts.
First of all, if your salary is pretty low (lower than the average in your state), you don't even have to worry about this test. It's obvious that you don't make much money, and you don't have to go through any great obstacles to prove.
However, if your income is higher than the average, you'll have to take some extra measures to prove the bankruptcy is a legitimate option for you.
If the court thinks that you make plenty of money and don't need a chapter 7 bankruptcy, you may be forced to file for chapter 13 instead. Chapter 13 bankruptcy, by the way, gives you a payment plan instead of simply wiping out your debt.
You should know that most people who would have qualified previously will still be eligible under this new law. However, the process has become more difficult, so you should have legal assistance by your side at all times. Good legal advice will probably pay for itself if you're able to successfully file for bankruptcy - 15224
Bankruptcy is still a viable option, but there are some new rules that you should be aware of. The biggest change in the bankruptcy law is something called the means test.
There's much controversy about whether the new law is bad for consumers. It seems to have come about because of extensive lobbying from the credit industry in recent years, and Congress finally passed this law in 2005.
Essentially, this law tries to make it more difficult for someone to file for bankruptcy, specifically chapter seven bankruptcy where most of your debts are completely wiped out. The new law was passed in 2005, and one of the main provisions was the means test. This test tries to determine whether or not you can actually pay your debts.
First of all, if your salary is pretty low (lower than the average in your state), you don't even have to worry about this test. It's obvious that you don't make much money, and you don't have to go through any great obstacles to prove.
However, if your income is higher than the average, you'll have to take some extra measures to prove the bankruptcy is a legitimate option for you.
If the court thinks that you make plenty of money and don't need a chapter 7 bankruptcy, you may be forced to file for chapter 13 instead. Chapter 13 bankruptcy, by the way, gives you a payment plan instead of simply wiping out your debt.
You should know that most people who would have qualified previously will still be eligible under this new law. However, the process has become more difficult, so you should have legal assistance by your side at all times. Good legal advice will probably pay for itself if you're able to successfully file for bankruptcy - 15224
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