New Bankruptcy Laws

By: Giles Rutter

The new bankruptcy law has provisions that make it harder for the people in debt to file bankruptcy. You probably won't lose any sleep over people who abused bankruptcy, but there are people who lose jobs or have uninsured medical expenses who the new law hurts.
You are required to do credit counseling within six months of filing your bankruptcy petition. 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.
If you have been moving around, the exemption of the state where you lived most of the time before the two-year period is used. 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. If you can find an attorney willing to take your bankruptcy case, it is going to cost you more because of the time and effort it takes the attorney to verify your information.
If you do find an attorney willing to file, it will cost you a lot more.

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.
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.
Also, under the old bankruptcy rules, the 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.
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.
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.

There are a lot of changes to the bankruptcy laws. It would probably be a good idea to consult an attorney before you file.

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Giles Rutter is a writer and webmaster with experience of debt. He has contributed to Bankruptcy Law. You are welcome to use this article in your website or blog provided that you leave this resource box intact.

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