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Bankruptcy
management before their debts can be wiped out. Some filers with higher incomes
debt under Chapter 13. And, because the law imposes new requirements on lawyers, it
won't be allowed to use Chapter 7, but will instead have to repay at least some of their
will be tougher to find an attorney to represent you in a bankruptcy case.
debt under Chapter 13. And, because the law imposes new requirements on lawyers, it
will be tougher to find an attorney to represent you in a bankruptcy case.
Here are some of the most important changes.
Counseling Requirements
Before you can file for bankruptcy under either Chapter 7 or Chapter 13, you must
complete credit counseling with an agency approved by the United States Trustee's
office. Counseling is required even if it's obvious that a repayment plan isn't feasible or
you are facing debts that you find unfair and don't want to pay.
Once your bankruptcy case is over, you'll have to attend another counseling session,
this time to learn personal financial management. Only after you submit proof to the
court that you fulfilled this requirement can you get a bankruptcy discharge wiping out
your debts.
Restricted Eligibility for Chapter 7
Under the old rules, most filers could choose the type of bankruptcy that seemed best
for them -- and most chose Chapter 7 over Chapter 13. The new law will prohibit some
filers with higher incomes from using Chapter 7. Your income is calculated and
compared to the median income for your state.
How High is Your Income?
If your income is less than or equal to the median, you can file for Chapter 7. If it is
more than the median, however, you must pass "the means test" -- another
requirement of the new law -- in order to file for Chapter 7.
The Means Test
The purpose of the means test is to figure out whether you have enough disposable
income, after subtracting certain allowed expenses and required debt payments, to
make payments on a Chapter 13 plan.
Lawyers May Be Harder to Find -- and More Expensive
The new law adds some complicated requirements to the field of bankruptcy. This is
going to make it more expensive -- and time-consuming -- for lawyers to represent
clients in bankruptcy cases, which means attorney fees are going to go up.
The new law also imposes some additional requirements on lawyers, chief among
them that the lawyer must personally vouch for the accuracy of all of the information
their clients provide them. This means attorneys will have to spend even more time on
bankruptcy cases, and charge their clients accordingly. Some experts predict that this
combination of new requirements may drive some bankruptcy lawyers out of the field
altogether.
Property Must Be Valued at Replacement Cost
Under the old law, Chapter 7 filers could value their property at what they could sell it for
in a "fire sale" or auction; almost assuring they could keep the property. Under the new
law, you must value your property at what it would cost to replace it from a retail vendor,
taking into account the property's age and condition. This requirement is sure to
increase the value of property, which means more debtors stand to have their property
taken and sold by the trustee.
State Exemptions Aren't Available to Recent State Residents
Under the old bankruptcy law, the personal property debtors were allowed to keep in
Chapter 7 bankruptcy was determined by the laws of the state where they lived (as long
as they lived there for at least three months). Under the new law, you must live in a
state for at least two years prior to filing in order to use that state's exemption laws.
Otherwise, you must use the exemptions available in the state where you used to live.
Similar rules apply to homestead exemptions.
debt under Chapter 13. And, because the law imposes new requirements on lawyers, it
won't be allowed to use Chapter 7, but will instead have to repay at least some of their
will be tougher to find an attorney to represent you in a bankruptcy case.
debt under Chapter 13. And, because the law imposes new requirements on lawyers, it
will be tougher to find an attorney to represent you in a bankruptcy case.
Here are some of the most important changes.
Counseling Requirements
Before you can file for bankruptcy under either Chapter 7 or Chapter 13, you must
complete credit counseling with an agency approved by the United States Trustee's
office. Counseling is required even if it's obvious that a repayment plan isn't feasible or
you are facing debts that you find unfair and don't want to pay.
Once your bankruptcy case is over, you'll have to attend another counseling session,
this time to learn personal financial management. Only after you submit proof to the
court that you fulfilled this requirement can you get a bankruptcy discharge wiping out
your debts.
Restricted Eligibility for Chapter 7
Under the old rules, most filers could choose the type of bankruptcy that seemed best
for them -- and most chose Chapter 7 over Chapter 13. The new law will prohibit some
filers with higher incomes from using Chapter 7. Your income is calculated and
compared to the median income for your state.
How High is Your Income?
If your income is less than or equal to the median, you can file for Chapter 7. If it is
more than the median, however, you must pass "the means test" -- another
requirement of the new law -- in order to file for Chapter 7.
The Means Test
The purpose of the means test is to figure out whether you have enough disposable
income, after subtracting certain allowed expenses and required debt payments, to
make payments on a Chapter 13 plan.
Lawyers May Be Harder to Find -- and More Expensive
The new law adds some complicated requirements to the field of bankruptcy. This is
going to make it more expensive -- and time-consuming -- for lawyers to represent
clients in bankruptcy cases, which means attorney fees are going to go up.
The new law also imposes some additional requirements on lawyers, chief among
them that the lawyer must personally vouch for the accuracy of all of the information
their clients provide them. This means attorneys will have to spend even more time on
bankruptcy cases, and charge their clients accordingly. Some experts predict that this
combination of new requirements may drive some bankruptcy lawyers out of the field
altogether.
Property Must Be Valued at Replacement Cost
Under the old law, Chapter 7 filers could value their property at what they could sell it for
in a "fire sale" or auction; almost assuring they could keep the property. Under the new
law, you must value your property at what it would cost to replace it from a retail vendor,
taking into account the property's age and condition. This requirement is sure to
increase the value of property, which means more debtors stand to have their property
taken and sold by the trustee.
State Exemptions Aren't Available to Recent State Residents
Under the old bankruptcy law, the personal property debtors were allowed to keep in
Chapter 7 bankruptcy was determined by the laws of the state where they lived (as long
as they lived there for at least three months). Under the new law, you must live in a
state for at least two years prior to filing in order to use that state's exemption laws.
Otherwise, you must use the exemptions available in the state where you used to live.
Similar rules apply to homestead exemptions.
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to our LIVE CONFERENCE CALL
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This is an exclusive number for
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offices thanking us for the
opportunity that has changed
their life.
If you would like to be one of
these people call the # below
Opportunity / Job Line
1 (212) 461 8632
Product Line
1 (212) 990 6227
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