Are The Updated Bankruptcy Laws Supposed To Help You Out?

You can find 2 sides to the modifications in bankruptcy rules. It'll be a lot harder to file bankruptcy under chapter 7 and get a completely clean slate. For businesses, relying on issuing credit, the brand new personal bankruptcy law is doing great, decreasing personal bankruptcy claims from the thousands into the double digits.

However, lawyers working with the actual folks filing for bankruptcy say that the new law is seriously flawed because it puts more monetary burdens on already broke clients and reduces potential debt repayment to small companies.

Under the new law it has become a requirement that the individual filing bankruptcy obtains credit counseling both right before and right after filing.

People filing bankruptcy in general are not over spenders, but merely faced with temporary financial disasters including medical costs, layoffs, a divorce, gambling debts or any other crises. Before you can file bankruptcy, you're now required to complete credit counseling with an agency authorized by the US Trustees office.

This consumer credit counseling is designed to help you determine whether or not bankruptcy is appropriate. Once you complete your bankruptcy, the law needs you to attend another credit counseling session. These are new requirements. Just before this law was passed, the law did not demand an individual to go through counseling either just before or after the filing of bankruptcy.

Second, under the old law, a person could decide to file under Chapter 7 or Chapter 13. With the new law, the court will take a look at your monthly income and apply a means test concerning the state in which you live. If your income is less than or equal to the medium income, you'll be allowed to file Chapter Seven which in effect will provide you with a clean slate.

This medium income can vary from twenty-eight thousand dollars in Missouri to fifty-six thousand in Alaska. If your income is greater, you could be forced to file Chapter 13 unless you can demonstrate you don't have enough disposable income.

Under Chapter 13 you will not get a clean slate, but will need to make payments on your debts. Also, your lawyer now has to personally approve that your bankruptcy filing is accurate. This means more work for the attorney, with higher legal fees.

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"In previous times, a bankruptcy provided a fresh start for the filer," said Columbia attorney Gwen Froeschner Hart. "The new federal legislation offers language directed at helping creditors."

When you analyze credit card expenses for most individuals you'll see that they often consist of medical bills and day-to-day bills for the elderly or those making low or fixed incomes. Records show that 50% of credit card holders do not pay their full credit card bills every month.

33% of the population cannot afford medical insurance so they have to charge their prescription drugs. With the current Medicaid cuts and rigid bankruptcy legislation, who knows what is going to happen to these folks.

You can find some who say consumers are mistreating creditors. The irony is that credit card companies are begging for customers and offering significant amounts of unsecured credit, yet at the same time, lobbying for stricter debt controls.

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