Bankruptcy Laws

In 2005 the Bankruptcy Abuse and Prevention Act went into law. This act made filing bankruptcy more complicated than it had been before. The credit card companies heavily lobbied for stricter requirements for filing bankruptcy.

Means Testing

If you earn more than your states median wages, you may not be able to file Chapter 7 bankruptcy. In Chapter 7, you can liquidate all of your qualifying debt within three to six month. You will still be able to file Chapter 13, this type of bankruptcy typically takes anywhere from three to five years, and you will be put on a court-approved payment plan to repay your back debt. At the end of the repayment period, any qualifying debt will be eliminated.

When determining if you pass the means test, your trustee will take into account your family size and the amount of debt you have. Your living expenses will also be accounted for when determining if you qualify.

Counseling

Debtors considering bankruptcy must attend credit counseling. This counseling is to give the debtor options on how to handle their debt. Some counseling agencies will strongly suggest getting on a repayment plan. Be careful of this option, as the counselor may be getting a commission from the credit card companies. Or if you are to pay a monthly amount to the agency, how much does the counselor get from that. These options are in the counselors best interest and not necessarily yours.

Debtor Education

When the law passed, a second type of counseling was required before you could get your debt discharged in bankruptcy. The debtor education course must be from an approved list of agencies from the U.S. Trustee’s Web site.

More Paperwork

With the means testing and additional counseling sessions, more paperwork has been added to the case. Additionally, now lawyers must attest to the accuracy of the debtor’s information being submitted to the court; this requires more time and costs to the bankruptcy case.

If you are considering bankruptcy, contact a Plano bankruptcy attorney to find out if you can get a fresh financial start.