What you need to know about the Bankruptcy law change
Many people are currently under the impression that bankruptcy is no longer an option for them because of recent changes to the bankruptcy law. They have been told through word of mouth about the bankruptcy reform law, and they assume that this option for a new financial start is no longer available.
It's true that there have been some changes, but bankruptcy remains an option that you can and probably should discuss with a lawyer (and possibly a financial adviser if you can afford it). Bankruptcy is certainly not appropriate in every situation, but it can be a lifesaver for many individuals with overwhelming amounts of debt.
The reason that many people are confused about the current state of the bankruptcy code is that Congress passed a new law in the year 2005. This new law is extraordinarily complicated, and even lawyers may have difficulty sorting through all the details and restrictions.
The law places additional requirements for those trying to declare bankruptcy, and these requirements include mandatory counseling and having to prove your income and your need for bankruptcy. Still, bankruptcy has not been eliminated as an option for most people. You may have to go through some additional requirements, however, such as the means test.
If your annual income is lower than the median income for your state, then you don't even have to worry about this so called bankruptcy means test. That's because if your income is very low, it's not hard to believe you when you say that you're broke. If your income is higher than the median, you will have to go through a more rigorous process to prove that you need to declare bankruptcy.
This will involve documenting your income and your expenses carefully. You absolutely have to document all of your creditors carefully, or you can have some difficulty later on if your case is reviewed and found to have errors.
It may seem like a painstaking process, but your lawyer should be there to help you through the process. In case you're wondering about trying to declare bankruptcy on your own, let me save you the trouble. Don't even think about going it alone. The new bankruptcy reform makes things much more complicated even for lawyers, let alone lay people.
A good bankruptcy lawyer will have kept up to date on all the developments. This is important because the new bankruptcy law is quite complex, and there will be various court rulings on how to apply the bankruptcy code to various situations. Your lawyer must be well versed in all these things.
It's true that there have been some changes, but bankruptcy remains an option that you can and probably should discuss with a lawyer (and possibly a financial adviser if you can afford it). Bankruptcy is certainly not appropriate in every situation, but it can be a lifesaver for many individuals with overwhelming amounts of debt.
The reason that many people are confused about the current state of the bankruptcy code is that Congress passed a new law in the year 2005. This new law is extraordinarily complicated, and even lawyers may have difficulty sorting through all the details and restrictions.
The law places additional requirements for those trying to declare bankruptcy, and these requirements include mandatory counseling and having to prove your income and your need for bankruptcy. Still, bankruptcy has not been eliminated as an option for most people. You may have to go through some additional requirements, however, such as the means test.
If your annual income is lower than the median income for your state, then you don't even have to worry about this so called bankruptcy means test. That's because if your income is very low, it's not hard to believe you when you say that you're broke. If your income is higher than the median, you will have to go through a more rigorous process to prove that you need to declare bankruptcy.
This will involve documenting your income and your expenses carefully. You absolutely have to document all of your creditors carefully, or you can have some difficulty later on if your case is reviewed and found to have errors.
It may seem like a painstaking process, but your lawyer should be there to help you through the process. In case you're wondering about trying to declare bankruptcy on your own, let me save you the trouble. Don't even think about going it alone. The new bankruptcy reform makes things much more complicated even for lawyers, let alone lay people.
A good bankruptcy lawyer will have kept up to date on all the developments. This is important because the new bankruptcy law is quite complex, and there will be various court rulings on how to apply the bankruptcy code to various situations. Your lawyer must be well versed in all these things.
About the Author:
Don't let the fear of your debt take over your life. Get the facts about bankruptcy and learn how to get control of your debt. To learn more about filing bankruptcy visit us at http://personalbankruptcyquestions.org
posted by Credit Counseling at
6:49 AM
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