Bankruptcy law has changed since the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 took effect. Now, there are requirements and restrictions, some of which are beneficial. It will be important to look over the bankruptcy law changes to determine if they will affect any attempts to file. Consider other options you have if you actually can no longer qualify for bankruptcy under the new rules.
Bankruptcy law used to be more lenient. As a result, people began to abuse the system, filing when they really didn’t need to file and making huge purchases on credit before filing.
Not anymore. Now that is considered bankruptcy fraud. Consult with Eric Lanigan and Roddy Lanigan to find out if you qualify for bankruptcy. There are several financial options available to resolve problems.
For these reasons and more, changes had to take effect. When they now make it much harder for people to be able to file and eliminate their debts.
Eliminating or pay off debt under the protection of the government is one program to look into. Under Chapter 7 bankruptcy, debt is forgiven while in a Chapter 13 bankruptcy, it is expected that a person follow a debt payback plan in five years. The old bankruptcy laws allowed filers to basically choose which chapter they preferred to file under.
Also, Chapter 7 filers could value their property at the auction price under the old bankruptcy law. The new law puts the retail price on personal property, increasing the value and the chance of the property being repossessed. Under the old law, debtors were allowed to keep an amount of personal property regulated by the filers state of residence.
The new law requires at least two years of residence in the state before using their exemption laws. When the old law was enacted, housing and food allowances were determined by the actual cost.
Under the law changes, there are fewer leniencies for housing and food allowances. The IRS sets these allowances afor food per month and for housing and utilities. Income has to be below the state’s median income for your size family.
A repayment plan will also need to be enforced under Chapter 13 if the court determines owing is $100 or more of disposable income. Child support becomes a high priority debt. Also, if you file now, credit-counseling courses within 180 days of filing are also required.
The new bankruptcy law changes also limit home exemptions if the home was purchased less than three year and four months before filing for bankruptcy.
These changes not only affect those filing, but everyone involved. The new bankruptcy law affects credit card companies. They now have to include on the bill how long it would take to pay off the current balance at the minimum payment rate.
Lawyers are expected to raise their fees for these services because of the liability issues the new rules imposes. The lawyers will have to spend more time crossing their T’s and dotting their I’s to make sure not to break any laws and meet all requirements when filing client documents and processing files.
With the new bankruptcy law changes, came a flood of last minute filings under the old law. Thus, the sudden number of filings affected the courts. Overall, the new laws force those who would otherwise qualify for Chapter 7 to file under Chapter 13.