Changes in the Bankruptcy Laws

There were some changes implemented in the bankruptcy laws and many people may not be aware of what they are as of yet. These are the new rules of bankruptcy; the old law stated that a person can choose to file either chapter 7 or Chapter 13. The new law remained almost the same except for one catch, a debtor can choose Chapter 13 or Chapter 7 but if a debtor chooses Chapter 7 and does not have the right asset value then the judge can change the claim to a Chapter 13 which is a reorganization plan rather than a Chapter 7 liquidation plan.

The old law stated that any person who is willing to abide by the jurisdiction of the bankruptcy court can file a claim. A lawyer is available and subject to fierce competition. The new law is that before you can file for bankruptcy you the debtor must go to a court approved credit counselor. Lawyers for the debtors will face personal liability if their client is not eligible for Chapter 7.

People who wish to claim Chapter 13 to set straight any mortgage back payments or to catch up in taxes and discharge debts that are not allowed to be discharges in Chapter 7. Secured debts like car loans can be decreased to the present amount of the collateral that was originally placed. The disposable income for figuring out how much of the debt before a claim was filed has to be repaid and that is determined the amount of living expenses are necessary for a person to live.

The new law says that disposable income will be figured out using the standard IRS collections rather than allowing a judge to figure it out, that way it is fair to everyone and everyone’s situation is different. If there are any liens on any vehicles then it will be limited to 2 and half years before the filing date. Debtor’s gross income that is more than the state median will be required to remain in Chapter 13 status for a period of 5 years.

The old law states that there will be an automatic stay from collectors calling to attempt to collect money from you once you have established a claim. The creditors need permission from the courts to pursue you as a debt. The new law states that the automatic stay has less certainty about the protection it gives the debtor. When you file for bankruptcy the collections people may not call you to collect back monies due. If a creditor is not included in the filing there is no protection from them.

A discharge is all but a certainty if you have presented your paperwork and did all of the required elements but if a creditor figures out that the debt incurred by some type of fraud then a judge has every right to dismiss your claim and you will still be responsible for the debt so as a tip we can offer: BE HONEST!!!