New Bankruptcy Law – 6 Vital Things To know Before Filling Bankruptcy!

The all new bankruptcy law is considerably harsher than the old one established in 1978 use to be. It makes things much more difficult, both for anyone filling bankruptcy to meet the requirements and for the attorneys involved in helping these people to do so.

So what are the main changes in the new bankruptcy law?

There are several changes you need to know about that have taken place in the new bankruptcy law.

Firstly there is now such a thing as a Means Test that is applied so that you can show that you aren’t in any way abusing the use of the bankruptcy option. In this Means Test your monthly income is taken into consideration, minus a number of expenses that are allowed with in the new bankruptcy law. If you come out of the Means Test with what is considered median income you will have no choice but to file for Chapter 13 bankruptcy.

Secondly, the IRS has set up very strict guidelines for what they like to call allowable expenses. Within these allowable expenses you will be allowed $200 per month for your food and $800 per month for housing costs.

Thirdly, it is vital you understand that there are both state and federal bankruptcy laws in the USA. You will most likely find that some of your state laws are more lenient than others. Of cause, you can’t exactly shop around for the best deal. You will obviously have to be a resident in the state where you are filing for bankruptcy and by law you must be so for an absolute minimum of 2 years. So you will be stuck with what ever laws apply to your state, you can only hope they suet your interests and situation.

Fourth, you will be obligated to attend a credit-counseling course that is on the approved list of the IRS and do so within 180 days from when you file for bankruptcy. It is important to note that although this is an obligation, this is not a free course. It will cost around 75 US dollars.

Fifth, following the new bankruptcy law there is now additional paperwork that you will be obligated to fill out so as to make one hundred percent sure you are the right candidate for bankruptcy. Some of the things that you will have to give the IRS include but aren’t limited to: a full list of all your unsecured and secured creditors; absolute proof that you have indeed taken the credit counseling course; a very detailed list of all your costs and your monthly income; liabilities and assets; your most recent tax return; your photo ID and payment stubs.

Sixth, there are now a number of pretty hefty legal fees that you will have to pay all thanks to this the new bankruptcy law. This is so, since you will be obligated to have a bankruptcy attorney certify that your figures are 100 percent correct. Otherwise, it is possible that both you and your lawyer could face some pretty expensive sanctions. Be cause of all this, bankruptcy lawyers now have no choice but to perform far more investigations and general fact checking than ever before in order to ensure that your info is 100% correct.

How do we interpret the new bankruptcy law?

Even thou there is nothing in the new bankruptcy law stating you have to retain a lawyer, it would be a very wise decision to do so. Doing so will almost definitely save you a considerable amount of time since if you forget to file certain documents it is quite possible your case will be dismissed and you will have to start all from the beginning. You do certainly don’t want to go through this in an attempt to save yourself money since it will almost definitely only come back to haunt you in the end. Also you are far more likely to come out of your bankruptcy application in the best possible way for your situation with an experience lawyer since he/she will have the experience to make the best decisions for you. So, really there is no doubt, the best way to go is with a experienced bankruptcy attorney.

The new bankruptcy law as you can see is all about making it more difficult for you to file bankruptcy. But if you abide by the rules and you have a compelling case you still can file bankruptcy. Remember to always look into all your options before attempting to file for bankruptcy. If theirs one thing that hasn’t changed since the new bankruptcy law it’s that filling bankruptcy should always be your last option.

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Article Tags: Bankruptcy Law, New Bankruptcy Law, The New Bankruptcy Law

This entry was posted on Tuesday, May 27th, 2008 at 1:19 am and is filed under Bankruptcy Facts, Bankruptcy Laws, How To File Bankruptcy. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

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