|
The new bankruptcy law
On April 20, 2005 President George W. Bush signed into law a new set of bankruptcy laws.В Though some provisions took effect immediately, most substantive changes will become effective on
October 17, 2005.В The following are some of the changes that the new law will require.
Qualification for Chapter 7- The Means Testing
 If your household income is greater than the state median income for a family of your size then the bankruptcy
trustee may make request that the court dismiss your case due to abuse.
The court will presume that you are ineligible for Chapter 7 bankruptcy if your current monthly income should,
according to a list of permissible expense amounts, leave you with at least $100 per month to be repaid to your
creditors.В In such cases, you will have to repay your debts over a five year period through Chapter 13.
In order to successfully argue against dismissal or conversion of your case to Chapter 13, you must demonstrate
"special circumstances that justify additional expenses or adjustments of current monthly income."
And even if your income falls below the state median, the court may still dismiss your case for abuse.
Mandatory Credit Counseling and Education
Every individual who files for bankruptcy must, within the 6 months prior to filing, receive mandatory credit
counseling from an "approved nonprofit budget and credit counseling agency." The credit counseling agency must provide proof that you have received the mandatory counseling.
You will not be permitted to discharge your debts under Chapter 7 or Chapter 13 unless you complete a
mandatory debtor education course in personal financial management as approved by the U.S. Trustee.
Debts owed to a single creditor totaling more than $500 for luxury goods incurred within 90 days of filing are
presumed to be non-dischargeable; cash advances of $750 within 70 days are similarly treated.
If you have moved from a different state within the past two years, you may be subject to the laws of your former
state of residence in connection with what property you are allowed to keep in Chapter 7.
Using Bankruptcy to stop Creditors
The new law limits your ability to stop creditors through the use of the automatic stay. If you have filed for
bankruptcy within the past year and need to re-file because the first one was dismissed, your creditors can collect again from you 30 days after the new case is filed.
If two or more bankruptcy cases were dismissed during the prior year, the automatic stay does not go into effect at
all until the court so orders after a hearing and a demonstration that the filing was made in good faith. There is an
assumption that you have filed your bankruptcy case in bad faith unless you can prove otherwise.
If you file for bankruptcy in order to stop an eviction proceeding, the landlord will be able to continue with the
eviction if for any reason you fall behind on your new rental payments after the case is filed.
Documents to be provided for your bankruptcy case
In addition to the list of creditors, schedules of assets liabilities, income and expenses, debtors must provide:
o certificate of credit counseling
o pay stubs for the 60 days before filing your case
o tax returns or transcripts for the most recent tax year
o tax returns filed during the case including tax returns for prior years that had not been filed when the cases began
o photo identification
Failure to provide the documents within 45 days after the petition has been filed results in automatic dismissal of the case.
Time between filing bankruptcy cases
You will not be eligible to receive a discharge of your debts in Chapter 7 if you received a prior discharge within 8
years of the new filing.
You will not be eligible to receive a discharge in Chapter 13 if you have filed a Chapter 7, 11 or 12 bankruptcy
case within the 4 years prior to the date of filing of the pending case, or if you have filed a Chapter 13 case within 2 years of the pending case.
These are not the only changes in the new law, and there are more drawbacks if you wait.
|
