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New Bankruptcy Laws And The Major Changes
By
Asheesh Mani
Keeping in view
the increasing number of bankruptcy frauds,
various new bankruptcy laws have now been
included in the bankruptcy code of the
United State. The bankruptcy laws have
always been a complex one and now, with the
inclusion of these new laws, the complexity
has risen to a great level only. Still, if
you are planning to file for bankruptcy, or
if you are a creditor and are concerned
about the money, you have lent, it is
important for you to be aware of the main
changes that have been brought by these new
bankruptcy laws. To start with, you must
note that the new bankruptcy laws have come
into effect by October 17, 2005. Following
are some of the major changes:
Passing the Means Test Is Mandatory For
the Debtors
Since, the debtors have caused most of the
bankruptcy frauds; the new bankruptcy laws,
have in fact, tried to safeguard the
creditors. Now, it is a matter of the past,
when the debtors had the freedom to choose
the kind of bankruptcy they want to file,
court petition for. The new bankruptcy laws
have now made it mandatory for the debtors,
to pass the means test before filing
bankruptcy. The means test is a procedure,
in which the available sources of income of
the debtors are assessed. You are supposed
to evaluate your total income and expenses.
Now, you should deduct the expenses, and see
how much money is left with you, after
paying off all the necessary expenses. Is
this amount sufficient to pay off the
monthly installments of the debts you owe?
If the money left with you is very little,
and much less than the median income of the
state, you can qualify for chapter 7
bankruptcy. On the other hand, if this
amount is greater than the median income of
the state, your only available option will
be to file for chapter 13 bankruptcy or to
go for any bankruptcy alternative.
Credit Counseling
The new bankruptcy laws have also made it
mandatory for the debtors to go through a
government-approved credit counseling
service. The purpose is to make sure that
there are no bankruptcy alternatives
available to you. The credit counselor will
review your financial situation and the
amount of debt you owe to various creditors.
If the credit counselor finds that a debt
consolidation service might bring a solution
for you, you will not be able to file for
bankruptcy. In that case, your bankruptcy
petition will be rejected and the bankruptcy
court will ask you to pay the debts through
a debt consolidation service.
New bankruptcy laws have come into effect
from October 17, 2005. As per the new laws
of filing bankruptcy, now it is mandatory
for the debtors to go through the means test
and a credit counseling service, before
embarking on a filing bankruptcy process. It
is essential, in order to make sure, whether
you qualify for chapter 7 bankruptcy or
chapter 13 bankruptcy.
Conclusion
Are you one
of the many that suffer from insurmountable
debt and wonder if bankruptcy is an option?
Give us a call at (203) 924-6700 or
contact us.
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