Wanting to avoid bankruptcy?

Wanting to avoid bankruptcy? There are new bankruptcy laws you should know about before you even think about filing! Bankruptcy Law – Credit Counseling. 

With the new bankruptcy laws, no mater if you are thinking of filing Chapter 7 or Chapter 13 bankruptcy, you are required to attend credit counseling. This must be done before you file, and must be done before a court approved credit counseling center. You need to submit a certificate or in some cases, repayment plans to the courts, as proof that you have met the requirements under the new bankruptcy law.  After filing bankruptcy, you will then be required to submit another certificate showing that you have attended another credit counseling course, learning to manage your personal finances. 

New Bankruptcy Law – Chapter 7 Filings:  The requirements for filing a Chapter 7 bankruptcy have also changed. Now, due to the changes in the laws, you have to prove your income. If you have a higher income than stated by the median income within your state, you will likely have to file a Chapter 13 bankruptcy instead of a Chapter 7.  With chapter 7 the bankruptcy trustee gathers and sells the debtor’s nonexempt assets and uses the proceeds to pay the creditors. Part of the debtor’s property may be subject to liens and mortgages that pledge the property to other creditors. In addition, the Bankruptcy Code will allow the debtor to keep certain “exempt” property; but a trustee will liquidate the debtor’s remaining assets. Potential debtors should realize that the filing chapter 7 may result in the loss of property. 

Bankruptcy Law – Chapter 13:   With the new bill and filing chapter 13 your “reasonable living standards” is no longer determined by a judge on a case by case basis, there is now a National Standard determined by the IRS for all debtors. You will also be required to take what is called a means test. This is used to determine rather you are capable of making repayments under a Chapter 13 repayment plan bankruptcy So basically you are now on a long payment plan paying back all your debt. A lot more than what you would be paying if you chose another form of debt relief If your thinking of filing chapter 13 or chapter 7 you can pretty much say good bye to cable TV, cell phones, movies, or anything else that are not with in “reasonable living standard”. 

The tough new bankruptcy law will have Americans do away with the court systems of filing bankruptcy and turn to settling their debt. Banks started settling for less then the original balances because it is beneficial to them for the following reasons.  1.) Lump-sum of 30-50% today is far better than the same amount collected over 3 to 5 years. 2.) Under Chapter 13, it will take the creditors 3 to 5 years to recover that 30-50%. 

It is important to understand the new bankruptcy laws and how they would affect you before you even think about filing bankruptcy in any state. Make sure you do your research and know what is best for you before you decide on how to eliminate your debt. 

Note: This is not to be considered legal advice of any kind. If you are interested in filing bankruptcy, you should consult with a licensed attorney in your state.