Finding the Right Information about Bankruptcy Law
In the recent past, the process of filing for bankruptcy was easy. All this has changed. United States bankruptcy laws were changed in 2005 and ever since then the new changes in these laws have made it all the more difficult to overcome old mistakes and start life afresh.
The new bankruptcy laws are quite strict and have a lot more requirements than they did previously. If you are considering filing for bankruptcy, you should try and understand these points:
Credit Counseling:
Regardless of where you file you bankruptcy and whether or not it is Chapter 7 or Chapter 11 bankruptcy, anybody who files for bankruptcy is required to attend credit counseling by a service which has been court approved.
Chapter 7 Filings
With the new law in place, the right to file Chapter 7 bankruptcy is no longer an automatic right. If after showing your income, the court feels that you make more than the average income made in your state, you may be asked to file for Chapter 13 bankruptcy and thus enter a repayment schedule to pay all or most of your creditors.
Chapter 13:
With a Chapter 13 filing, your repayment schedule may be much more than you can handle. The amounts that you have to repay each month are determined by specific guidelines which take into account your previous (not current) yearly income, as well as your available assets.
Residency:
Everyone is required to obey federal bankruptcy laws, but certain states also offer their own laws which have certain considerate exemptions. However, new federal law states that residents must have lived in a state for at least two years (usually), to qualify for certain exemptions.
Allowable Expenses:
Originally, people who filed for bankruptcy could get rid of their debt and start fresh in two or seven years and by doing this they could continue to live a lifestyle that they were used to. With the new laws, this no longer holds true.
With the new laws, the IRS makes a determination of your monthly budget; they also determine the amount that you should be able to repay. A lot of people are forbidden from having cell phone expenses or associated expenses like cable TV, high-speed Internet access, movies, and meals out with the family due to the minimum allowable expenses determined by the IRS and the courts.
Bankruptcy isn’t what it used to be anymore and to blame for this we have the millions of people who abused this generous system in the past. The whole process was usually available to people who were in serious financial situations and needed some recourse from excess debt and the ability to start anew. Current bankruptcy laws are designed to punish people who have been deemed to be irresponsible with their finances. These laws also force them to pay back most of the debt that they have accumulated for themselves. Once, filing for bankruptcy was a good way to sort out a bad situation but now many people are trying to sort out their financial problems instead of having the government help them through bankruptcy filings.
Guy Starbuck is a tennis and golf playing, health oriented, coffee drinking writer and financial guru who writes for MotorMaven.com, and Cargoyle.com.
