The New Bankruptcy Law Information You Need To Know Before You File
Below is a MRR and PLR article in category Finance -> subcategory Credit.
The New Bankruptcy Law: What You Need to Know Before Filing
Overview:
With the new bankruptcy law now in effect, the landscape has significantly shifted for those considering filing for bankruptcy. This article covers key aspects of the law and how these changes might impact you.
Counseling Requirements:
Under the new law, credit counseling is mandatory before filing for bankruptcy under Chapter 7 or Chapter 13. This counseling must be done through an agency approved by the United States Trustee's office. Its purpose is to evaluate whether bankruptcy is necessary or if an alternative payment plan could work for you. Participation is required, even if you’re certain you don’t want a repayment plan. You’ll need to provide the court with a certificate confirming your attendance at this counseling. After your bankruptcy case concludes, you'll also attend a session on personal financial management to complete the process.
Changes in Chapter 7 Filing:
A significant change under the new law affects those wanting to file for Chapter 7 bankruptcy. Previously, filers could choose between Chapter 7 and Chapter 13, with many opting for Chapter 7. Now, individuals with higher incomes may be disqualified from Chapter 7.
To determine eligibility for Chapter 7, compare your average monthly income over the past six months to your state’s median income for a similar household size. If your income is at or below the median, you can file for Chapter 7. If it exceeds the median, you must pass the "means test," which calculates your “disposable income” after accounting for specific deductions from your current income.
If the disposable income is below $100, you pass the test and can file for Chapter 7. An income above $166.66 disqualifies you. If you fall in between, you may still file for Chapter 7 but will need to pay a portion of your debt.
Impact on Legal Representation:
The law's complexity could make finding affordable legal representation more difficult. The increased time and effort required for lawyers to navigate the new regulations mean higher attorney fees. This could result in a scarcity of lawyers specializing solely in bankruptcy, as some may exit the field due to these pressures.
Conclusion:
Now that you're informed about the significant changes in bankruptcy laws, proceed cautiously and ensure you're making the best decision for your situation.
You can find the original non-AI version of this article here: The New Bankruptcy Law Information You Need To Know Before You File.
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