Changes in bankruptcy law
Most people have heard that there have been substantial changes in the bankruptcy law recently. Unfortunately, many of these people who desperately need financial relief have come to believe that bankruptcy is no longer available for most individuals. This is simply not the case.
The recent changes in bankruptcy law have made the process a little more difficult for consumers, but bankruptcy is still available as a real option for many individuals. The changes include mandatory credit counseling classes and more extensive documentation of all of your income and expenses to prove that you need bankruptcy. In addition, any creditor who wishes to see your tax return information is entitled to do so under the new bankruptcy code passed in 2005.
In case you’re wondering, the official name for the new bankruptcy law is Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Probably the biggest change in this law is something called a means test. Now if your income is less than the median income for your state, then this test will not apply to you.
However, if your income is higher than the median, you will have to go through this test which proves that you need bankruptcy. You and your lawyer will have to go through some hard work putting together all of your income and expenses to show the court what your financial life looks like.
One of the drawbacks in this recent law is that it creates more work for your attorney, which may cause an increase in your legal fees. First of all, you should keep in mind that you’re trying to wipe out all of your current debts by filing chapter seven bankruptcy. If you’re successful, that should make it easier to pay your lawyer for your case. In addition, you can take some of the workload off of your lawyer by learning as much as possible about your case beforehand. Keep learning with articles like this one and get all of your financial documents in order before you ever visit an attorney.
Although bankruptcy may or may not be the best option in your individual circumstances, you should know that it remains a viable option despite the changes in the bankruptcy code. Only a small percentage of people are no longer eligible because of the changes.