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October 2005 Bankruptcy Law Changes
In October of 2005 some new changes were put into law that affect all bankruptcy laws.
These new provisions affect the ability to file bankruptcy but they also put some requirements
in place that you need to understand. There are several ways to find out about these changes,
but there are many government websites that can help you understand these changes and how they
affect you. Read more about the
US Bankruptcy Laws and how they affect
your circumstances before you make the decision to file. Also, make sure to consult a bankruptcy
attorney. Following are some of the key changes.
Less ability to file under Chapter 7
One of the main features of the new bankruptcy laws was the change in ability to file for Chapter
7 Bankruptcy. Prior to the changes in the law, you were able to file Chapter 7 without regard to your
income or the amount of debt that you owed. Chapter 7 also allowed for "stay's" on your debt
allowing you to keep your home.
Chapter 7 filings require you to provide proof of your income over three years (you must provide
tax returns). Provided your current monthly income is above the
median income in your state,
and you can pay $100 per month toward paying off your debt, you cannot file under Chapter 7 Bankruptcy
laws. This is a very significant change to the prior bankruptcy laws.
Automatic Stays when filing for bankruptcy will now not stop eviction actions, driver's license
suspensions, legal actions for child support, or divorce proceedings in most cases. You should look
into the stays prior to filing so you'll understand if you're able to get them. Otherwise, filing for
any form of bankruptcy could be counterproductive for you.
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The New Requirements
Another significant change to the bankruptcy laws was counseling requirements. The new bankruptcy
counseling requirements basically say that in order for you to file bankruptcy you must complete counseling
before you file and you must also complete a separate counseling before your bankruptcy is discharged.
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Pre-filing credit counseling is a requirement and must be conducted by a government approved
Credit Counseling Agency prior to you filing
for any type of bankruptcy protection. There is a certificate that must be provided with your bankruptcy filing.
After you've completed the bankruptcy and are prepared to discharge it, you must then go through a post bankruptcy
counseling course. This course is a Financial Management Course designed to help you become more educated about
credit,
how to use it wisely, how to budget and more. This course is also offered by a government approved agency and must be
approved by the Trustee of your bankruptcy. The same agencies provide the courses for the Credit Counseling services
mentioned above.
Summary
Before you make the decision to file for bankruptcy be certain that you read all of the information that can affect
you. Contact your local legal services offices and find out how tall of the changes that were made to the laws can affect
you. Understand all of your options before you file for bankruptcy. It may not be the best option for you.
Related topics: Bankruptcy Introduction,
Types of Bankruptcy,
Life After Bankruptcy,
What Bankruptcy Cannot Do
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