Home | Ask Your Question | Mortgage Glossary
Find me a lender for:  
New Bankruptcy Law Five Essential Things to Know By Charles Essmeier

Last April, Congress passed the Bankruptcy Abuse and Consumer Protection Act, the most sweeping reform of our nations bankruptcy laws in more than twenty-five years. Proponents of the bill argue that most consumers who file for bankruptcy do so simply because they do not wish to pay their bills. That is an arguable point, as studies show that most bankruptcy filers have suffered illness, injury or job loss. Regardless of the reasons, Congress has made the changes, and millions of Americans will be affected when the new law takes effect on October 15.

Here is a short list of the changes and how consumers will be affected.

  • Goodbye, Chapter 7 Until now, most consumers have been permitted to file under Chapter 7 of the Federal bankruptcy code. Chapter 7 permits the court to wipe away most consumer debt, allowing the debtor to make a fresh start. The new law establishes a means test. Anyone with income that exceeds the median income for his or her state will have to file under the stricter Chapter 13 instead, which requires a repayment schedule of up to five years.
  • Attorney problems The more complicated Chapter 13 filings will make it necessary for filers to hire an attorney. Most attorneys who practice bankruptcy law are already reporting dramatically increased business; some are even turning clients away. If you need an attorney, hire one now, as they are soon going to be very busy
  • More attorney problems - The law also leaves lawyers legally responsible for the accuracy of the information filed on their clients behalf. This has led most lawyers to increase their fees. Some, including those who do bankruptcy work on a pro bono, or free, basis, have decided to forego bankruptcy work altogether. In short, it will soon be more difficult and more expensive to hire an attorney.
  • Mandatory credit counseling Congress has required that debtors obtain credit counseling from an approved agency within six months of filing for bankruptcy. As of now, this requirement is largely undefined, with rules, regulations, and qualifications for counselors still up in the air.
  • Expect to may more bills Some obligations, such as student loans or taxes, must be paid in full even after a bankruptcy filing. The new law lengthens the list of debts that cannot be forgiven.
  • The new legislation, rightly or wrongly, makes it more difficult, more time consuming and more expensive for a debtor to file for bankruptcy. Consumers who are considering doing so should act now, as the regulations will soon become stricter. Bankruptcy should always be a last resort option, but if you cannot avoid it, you should act quickly.


    Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including End-Your-Debt.com, a site devoted to establishing credit, debt consolidation and credit counseling.




    See Also:

    Bankruptcy Tips And Helpful Alternatives
    Before you file bankruptcy, it is a good idea to look into other alternatives if at all possible. New bankruptcy laws make it more difficult to file than it used to be.Why Has Filing For Bankruptcy Doubled?From the period of 1994 to 2004, filing for bankruptcy has doubled. Bankruptcy filing has ... more...

    Bankruptcy Information - Common Courtroom Terms
    Bankruptcy- Bankruptcy Terminology, 45 Terms to Know and UnderstandMany debtors and creditors know little of the bankruptcy process. These terms are to help assist individuals in understanding bankruptcy. The terms provided are as defined from the Public Information Series of the Bankruptcy Judges ... more...

    Bankruptcy: What You Need to Know
    Personal bankruptcy is a legal way to give people with overwhelming debt a fresh financial start. Many people do not realize that there are five types of bankruptcy options available under the U.S. Bankruptcy Code; however, for most consumers there are really only two viable options; Chapter 7 and ... more...

    Navigation After Financial Closure - Bankruptcy Personal Loans
    Bankruptcy has a stigma attached to it that is hard to eradicate. Is that what you really think, then you need to rethink. Just because you have filed for bankruptcy does not mean you do not have a right to a solid financial status again. Bankruptcy is as much deserving of a personal loan for ... more...


    More on bankruptcy...

    Search More Info On:

  • Bankruptcy
  • Credit Problems
  • Debt To Income
  • Obtain Credit
  • Credit Information
  • Copyright Laws
  •  

    Shop For Your Mortgage Now!
    Shop For Your Mortgage Now!

    You'll be re-directed to Top-Lenders.com

    Want to Know Your Rate?
    Get Customized Mortgage Quote Instantly

     
    ExplainingMortgages © 2005 - 2009