It was fairly easy to file for bankruptcy until just a few years ago. Not anymore anymore. In 2005, after Congress changed the country’s bankruptcy rules, many debtors discovered that the new “Bankruptcy Abuse Prevention and Consumer Protection Act of 2005,” was more an obstacle than helping to overcome past failures and begin again.Checkout Attorney Harry C Kaufman for more info.
The new legislation is tighter, with more criteria than ever before. It is important for someone contemplating bankruptcy to recognize the following:
Counseling for Credit:
If you apply for Chapter 7 bankruptcy that discharges your debt or Chapter 13 bankruptcy that enters you into a creditors’ repayment plan, anyone filing for bankruptcy is required by statute to attend credit counseling by a court-approved counseling service.
Filings of Chapter 7:
Under the new rule, your right to file for Chapter 7 bankruptcy is no longer yours. If the court finds that you make more than the average income within your state after proving your income, you will be allowed to file Chapter 13 bankruptcy instead and enter a repayment schedule to repay all (or most) of your creditors.
It is not unusual to find your repayment plan a little more than under a Chapter 13 filing you can handle financially. The sums that you have to repay per month are measured according to specialized guidelines that take your last year’s income (not what you now make) and your assets into account.
Although federal bankruptcy laws must be met for all, some states offer their own, more lenient exemptions. However, in order to apply for any state exemptions, the new federal legislation requires citizens to live in a particular state for a defined amount of time (usually at least two years).
In the past, bankruptcy filers could effectively remove their debt and start anew in seven years, while continuing to enjoy the lifestyle they had become accustomed to. That isn’t the case anymore.
The IRS sets your monthly spending, and what you should be able to repay, under new federal bankruptcy laws. Many are restricted from providing expenses for mobile phones as well as cable TV, high-speed Internet access, movies, family meals, and everything else outside the IRS and courts’ minimum permissible expenses.