What you need to know about the Bankruptcy law change
The recent bankruptcy law has brought some changes with it, and many people are under the false impression that they can no longer file for bankruptcy. Many of the people who need it the most wrongly assume that bankruptcy is no longer a viable option for them.
It's true that there have been some changes, but bankruptcy remains an option that you can and probably should discuss with a lawyer (and possibly a financial adviser if you can afford it). Bankruptcy is certainly not appropriate in every situation, but it can be a lifesaver for many individuals with overwhelming amounts of debt.
Much of the confusion comes as a result of the new bankruptcy reform which was passed by Congress and signed by President Bush in 2005.
The bottom line is that declaring bankruptcy will require you to take some additional steps including mandatory financial counseling. The most important revision in the bankruptcy code requires that you pass something known as the means test. The point of this test is that you have to prove that you do need bankruptcy.
If your annual income is lower than the median income for your state, then you don't even have to worry about this so called bankruptcy means test. That's because if your income is very low, it's not hard to believe you when you say that you're broke. If your income is higher than the median, you will have to go through a more rigorous process to prove that you need to declare bankruptcy.
This really boils down to putting together a well documented list of all of your income and expenses. Be careful not to make any omissions, or this can come back to bite you later on.
It may seem like a painstaking process, but your lawyer should be there to help you through the process. In case you're wondering about trying to declare bankruptcy on your own, let me save you the trouble. Don't even think about going it alone. The new bankruptcy reform makes things much more complicated even for lawyers, let alone lay people.
That is, you need someone who has kept up to date on these latest developments, especially when you consider that there are court rulings coming out over time that will shed new light on this law. You should also learn as much as possible before discussing your case with a lawyer. You can learn quite a bit about whether bankruptcy is right for you and how best to proceed before ever walking into a lawyer's office.
It's true that there have been some changes, but bankruptcy remains an option that you can and probably should discuss with a lawyer (and possibly a financial adviser if you can afford it). Bankruptcy is certainly not appropriate in every situation, but it can be a lifesaver for many individuals with overwhelming amounts of debt.
Much of the confusion comes as a result of the new bankruptcy reform which was passed by Congress and signed by President Bush in 2005.
The bottom line is that declaring bankruptcy will require you to take some additional steps including mandatory financial counseling. The most important revision in the bankruptcy code requires that you pass something known as the means test. The point of this test is that you have to prove that you do need bankruptcy.
If your annual income is lower than the median income for your state, then you don't even have to worry about this so called bankruptcy means test. That's because if your income is very low, it's not hard to believe you when you say that you're broke. If your income is higher than the median, you will have to go through a more rigorous process to prove that you need to declare bankruptcy.
This really boils down to putting together a well documented list of all of your income and expenses. Be careful not to make any omissions, or this can come back to bite you later on.
It may seem like a painstaking process, but your lawyer should be there to help you through the process. In case you're wondering about trying to declare bankruptcy on your own, let me save you the trouble. Don't even think about going it alone. The new bankruptcy reform makes things much more complicated even for lawyers, let alone lay people.
That is, you need someone who has kept up to date on these latest developments, especially when you consider that there are court rulings coming out over time that will shed new light on this law. You should also learn as much as possible before discussing your case with a lawyer. You can learn quite a bit about whether bankruptcy is right for you and how best to proceed before ever walking into a lawyer's office.
About the Author:
Don't let the fear of your debt take over your life. Get the facts about bankruptcy and learn how to get control of your debt. To learn more about rebuilding your life after bankruptcy visit us at http://personalbankruptcyquestions.org
posted by Credit Counseling at
2:01 AM
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