Welcome to Bankruptcy Guide
Bankruptcy Loans Article
. For a permanent link to this article, or to bookmark it for further reading, click here.
Understanding the New Bankruptcy Law
from:On October 17, 2005, a new bankruptcy law went into effect. The purpose of the bankruptcy was to restore some fairness into the bankruptcy law in terms of who could qualify. Congress had become convinced that many people were taking advantage of the system under the old law in order to get out of paying debts they could afford to repay. The new law makes it more difficult to qualify for a bankruptcy, but it also places a heavier responsibility on the bankruptcy attorney.
The new bankruptcy law changed the old law in several important areas. For one thing, the new law resulted in more people qualifying for a chapter 13 filing rather than a chapter 7 filing. Under the chapter 7 filing, all of the debtor assets are liquidated and used to repay the creditors. In many cases, debtors have no assets except their house or car and so the creditor gets very little or nothing. A chapter 13 filing is a repayment plan which forces the debtor to repay as much debt as possible between 3 to 5 years.
The new bankruptcy law also established new calculation rules and made it more difficult to use the homestead exemption. The new calculation rule uses the IRS standard of living numbers to determine your net income figure. The IRS living standard amounts usually are often lower than what you actually spend. The homestead exemption refers to the fact the new law has placed greater restrictions on which state exemption you can use as determined by your length of residence. A bankruptcy attorney will carefully determine the status of your homestead exemption during the filing process.
Another addition to the new bankruptcy law is the requirement that debtors take a money management course and get 90 minutes of credit counseling. This process has been streamlined in that there are many ways to fulfill these requirements online.
One of the major changes in the new bankruptcy law is the establishment of an income means test. The means test is how the courts will determine if you should be allowed to file a chapter 7. Under the means test, your income will be compared to the state median income in the state in which you live. Then your income will also be used in a formula that will determine if you can pay at least 25% of your net income to pay off unsecured debt. If you can, and your income is over the median, then the court will probably make you file a chapter 13 unless you can prove you have unusual circumstances.
This is just a quick snapshot of the new bankruptcy law changes effective October 2005. Of course, there are many other complex aspects to the law that only an attorney is qualified to interpret. Though the new law is more stringent than the old, it still gives millions of people a fresh start.
Bankruptcy Loans News
Houghton Mifflin Harcourt Publishing Files for Bankruptcy
Houghton Mifflin Harcourt Publishing Co., the publisher of authors from Mark Twain to J.R.R. Tolkien, sought bankruptcy protection to eliminate more than $3 billion in debt.
Read more...Alex Hotel, Flatotel Owners File for Chapter 11 Bankruptcy
205 East 45 LLC, the owner of east midtown Manhattan- located Alex Hotel, has $123 million in outstanding liabilities with the lenders group, according to a filing today in U.S. Bankruptcy Court in Manhattan.
Read more...REFILE-Dewey to consider bankruptcy filing - source
(Corrects month in which Dewey partner said no plans forbankruptcy to May from March in paragraph 13 of story publishedMay 18) * New crop of creditors pressuring Dewey to seek bankruptcy- source * Creditors ...
Read more...Dewey to consider bankruptcy filing: source
Ailing law firm Dewey & LeBoeuf is considering a bankruptcy filing as new debtholders take a more aggressive track, shifting away from earlier attempts at an out-of-court liquidation, a person familiar ...
Read more...Grads declare bankruptcy under mountain of student loan debt
Just as college seniors prepare to graduate, experts are warning about an alarming new trend. More students are declaring bankruptcy to help get out from under a mountain of student loan debt. “We are starting to see the first big wave,” says Christina Henry, a bankruptcy attorney at Seattle Debt Law. Henry said she has seen a notable increase recently in clients coming to her with student loan ...
Read more...