In April 2005, Congress changed almost every part of the bankruptcy law book. The filing of Chapter 7 bankruptcy claims have decreased significantly. Congress made it more difficult to file this type of bankruptcy. Furthermore, in the past, a consumer could decide which type of claim they wanted to file. This was done with the advice of their legal counsel. However, the current bankruptcy law book does not leave this decision up to the consumer or the judge's discretion. Strict laws and guidelines now govern this process. The bankruptcy law book states that a client's income must be subjected to the "means test." The judge looks at the monthly income of the bankruptcy filer. Then, the judge compares it to other workers in the state. A median income is established; if the client's income is the same or less than the median, the client can proceed with a Chapter 7 bankruptcy. If the client's income is above the median, the next step is the disposable income test. For example, the judge takes the monthly income of the client and deducts living expenses. The amount remaining will determine if the client can file a Chapter 7 bankruptcy or not.
Next, the judge determines if the client will need to file a Chapter 13 bankruptcy. The bankruptcy law books states that a Chapter 13 filing is essentially a repayment plan. The court sets the consumer up on a three to five year repayment plan. Thus, the client is put on a strict budget for this time period. If the client is successful, the bankruptcy process is complete. Then, the consumer can begin rebuilding their credit future. However, the bankruptcy law book incorporated a new twist in this process. All clients must first participate in credit counseling six months prior to filing a bankruptcy claim. These counseling sessions must be taken from an approved credit counseling agency. In addition, the client is even responsible for the costs of these sessions. Finally, the agency will issue the client a certificate of completion, and the client must bring this documentation to the court.
Then, the judge will proceed with the bankruptcy claim. It is important to choose a reputable bankruptcy lawyer. Lawyers that specialize in this type of law will be extremely familiar with the new bankruptcy law book. This is important due to the complex nature of the new bankruptcy law codes. The new codes also require a client to take budgeting and debt management sessions before the final bankruptcy decree will be issued.
In conclusion, bankruptcy is never an easy decision. Some people that are faced with this decision have been prudent managers of their money, and an unexpected life circumstance caused financial chaos. There is a good life after bankruptcy; however, it is crucial to hire an experienced attorney. Consumers can rebuild their credit and their lives.
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If you live in Alabama, Florida, Missouri, New York or Wyoming, please click here for additional information.
By an Act of Congress and the President of the United States, we are a federal Debt Relief Agency. Attorneys and/or law firms promoted through this Web site are also federally designated Debt Relief Agencies. They help people file for relief under the U.S. Bankruptcy Code. Disclosures Required Under the U.S. Bankruptcy Code.