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More About Personal Bankrupcy...
The new bankruptcy law has provisions that make it harder for the people in debt to file bankruptcy.
In addition to the new credit counseling requirement for all filers and the means test for chapter 7, there are other changes in the bankruptcy laws. Most of the changes will cost you money one way or the other. You are also required to attend money management classes at your expense before your debts are discharged. In Florida, your home would have been exempt no matter how long you lived there. Under the new bankruptcy law, if you live in a state for less than two years and it has a better exemption than where you lived previously, you can't use the more favorable exemption. If you bought your house less than 40 months (that's three and a quarter years) before filing bankruptcy, or violated securities laws, or have been found guilty of certain criminal conduct, you can only exempt up to $125,000 regardless of a state's exemption.
If any of the requirements of the new law confuse you and you decide you need a bankruptcy attorney, it's going to cost you more. It will be more difficult to find an attorney willing to handle your bankruptcy because of the liability and the time and effort it takes to verify all your information. The president of the American Bankruptcy Institute has reported that some attorneys say they may increase their fees by 75 to 100 percent.
It is clear from the changes mentioned here that it's going to be more difficult and costlier to file bankruptcy no matter what chapter you use to file.
You have information about the new bankruptcy law requirements for credit counseling, the income and means tests for chapter 7, residency requirements, and attorney liability, but there are even more changes you should know about.
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. 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.
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.
More people will be forced to use chapter 13 bankruptcy under the new law.
Chapter 13 bankruptcy required that you devote all your disposable income to repaying debts. Under the old rules, you subtracted your actual expenses from your monthly income to arrive at your disposable income. Then, instead of subtracting your actual expenses, you use allowed expense amounts set by the IRS. 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. The new law limits debt relief if you are filing after a prior case was dismissed. It would probably be a good idea to consult an attorney before you file.
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