Don’t Let Bankruptcy Law Scare You
On October 17, 2005 the world of bankruptcy law changed for the worse. Or did it? Is it really that much harder to file bankruptcy under that new law?
In the run up to the effective date of the new law filings increased to record numbers in virtually every bankruptcy court district in the United States. Scary terms like “means test” and “credit counseling” seemed to drive people out of the woodwork to beat the deadline.
After the law changed, many lawyers who used to file under the old law simply gave up filing bankruptcies because of a perception that the new law is overly complicated and time consuming.
Filing under the new bankruptcy law is a bit more complicated and is certainly more time consuming, but with effective bankruptcy counsel, successfully restructuring your debt is still possible.
One of the most feared provisions of the new law is the means test. The bankruptcy means test is a calculation used to determine what type of bankruptcy a debtor might file. To simplify things, the means test requires a debtor considering bankruptcy to be matched against the median state income of the debtor’s state of filing.
Debtors who are over the median state income may have a more difficult time filing a chapter 7 and might have to file a chapter 13 which requires a monthly repayment to the Chapter 13 Trustee. The means test will not prevent a debtor from filing, it will only help determine what chapter must be filed.
Most bankruptcy attorneys are finding out that the majority of people considering bankruptcy seem to be under the median state income so most are unaffected by the bankruptcy means test.
Another requirement that seemed to strike fear in the hearts of debtors and attorneys everywhere is “bankruptcy credit counseling”. The new bankruptcy law requires every debtor considering bankruptcy to complete credit counseling within the six months preceding their filing. Don’t let bankruptcy law scare you. If you need help, get help.