New Bankruptcy Rules - your questions answered right here...
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More About New Bankruptcy Rules...
You have information about the new bankruptcy law requirements for credit counseling, the income and means tests for chapter 7, residency requirements, and lawyer liability, but there are even more changes you should know about. It's no surprise these changes will make it harder and costlier to file bankruptcy.
If you are allowed to file Chapter 7 bankruptcy, there are changes in how your personal property is valued. Under the old law, you could value your personal property at basically 'garage sale' prices. That meant most, if not all your personal property would fall within the exempt property categories of most states.
Under the new bankruptcy law, you must value your property it the price it would cost to replace it retail, taking into account its age and condition. Since you have to come up with a retail price and your attorney has to certify it's correct, you just about have to have an appraiser to the valuation. A car is easier because you can just look up the blue book price.
Also, under the old bankruptcy rules, you exempt personal property you could keep under chapter 7 was determined by the laws of the state where you lived if you resided in the state for at leas three months.
Under the new law, you must live in a state for two years before filing bankruptcy in order to use the state's exemption laws. Otherwise you must use the exemptions of the state where you used to live.
More people will be forced to use chapter 13 bankruptcy under the new law. That reason behind that was to force people who could repay all or part of their debts to do so instead of using bankruptcy chapter 7 which wiped away most debts. That sounds reasonable to a lot of us.
Chapter 13 bankruptcy required that you devote all your disposable income to repaying debts. That part hasn't changed, but how you calculate your disposable income has. Under the old rules, you subtracted your actual expenses from your monthly income to arrive at your disposable income.
Under the new bankruptcy law, your monthly income is your average income for the six months before filing your petition. Then, instead of subtracting your actual expenses, you use allowed expense amounts set by the IRS. These amounts are often lower than your actual costs. The amount of 'disposable income' left may be more than what you have to spare every month. That means more chapter 13 bankruptcy plans will fail.
Under the old law, if your bankruptcy case was dismissed for any reason and you still couldn't pay your bills, it wasn't much of an issue to refile. The new law limits debt relief if you are filing after a prior case was dismissed.
There are a lot of changes to the bankruptcy laws. It would probably be a good idea to consult an attorney before you file. Even if the attorney will not take you on as a client to file bankruptcy, they may be willing to give you legal advice.
There are a lot of changes to the bankruptcy laws. It would probably be a good idea to consult an attorney before you file. Even if the attorney will not take you on as a client to file bankruptcy, they may be willing to give you legal advice.
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