Tougher Bankruptcy Laws Take Effect October 2005
In just a few short weeks, President Bush?s Bankruptcy Abuse Prevention and Consumer Protection Act will take effect. In a nutshell, the new law, which goes into effect on October 17, 2005, makes it more difficult to cancel your debts under Chapter 7 Bankruptcy protection. Instead, consumers will find themselves having to file for Chapter 13 Bankruptcy protection and paying back their creditors over a five year period. Here?s a look into some of the major changes that will affect consumers choosing to file for bankruptcy after the new law goes into effect - Qualifying - Chapter 7 or Chapter 13? To be able to qualify for protection under Chapter 7 bankruptcy, consumers will have to face a means test. The means test determines if your household falls above or below the median income in the state where you reside. Those whose total is greater than the state median income will not qualify to cancel debts under Chapter 7 protection and will alternately have to file under Chapter 13 and pay back your creditors. The major intent of bankruptcy reform is to require people, who can afford to make some payments towards their debt, to make these payments, while still affording them the right to have the rest of their debt erased. The amount you have to pay back under Chapter 13 protection will be greater because instead of a 3-year pay back period, that time frame is now extended to five years - to ensure your creditors get paid. Credit Counseling Anyone filing for bankruptcy under the new law will be required to go through mandatory credit counseling. Be careful before choosing a credit counselor as this field is filled with people looking to line their pockets while emptying yours. To find a trustworthy counselor, check to see if there are any complaints against them or their organization filed with your local Better Business Bureau. Secondly, find out if they are certified by the National Foundation of Credit Counselors or the Association of Independent Consumer Credit Counseling Agencies. Finally, find out if they have not-for-profit status. Personally I recommend Consumer Credit Counseling Services as they meet all three of the above criteria. They can be reached at 1-800-888-2227 and can connect you with a local office. The Cost Factor Filing for Chapter 7 protection under the old laws normally cost under $1,000. You should expect to pay more under the new laws as filing fees have been increased by $60. Additionally, your attorney will be required to double check all your financial information which will take more of his or her time. Also there is greater liability imposed on the lawyer which may cause their liability insurance to increase, which gets passed on to their clients in the form of higher fees. Under the new law, many are expecting fees to increase between 25-50%. Why Were the Laws Changed? The bottom line is that major commercial creditors lobbied hard for reform. Companies like CitiBank, MBNA, and other credit card issuers actively contributed proposed amendments along with generous financial support to reforming the bankruptcy laws - and in their favor, according to many consumer protection groups. ? 2005, http://www.yourfreecreditreportnow.com James is editor of "TO YOUR CREDIT", a free weekly newsletter with tips to help you manage your personal finances. Subscribe today and receive his ebook ?IDENTITY THEFT- How To Avoid Becoming the Next Victim!? and other free bonuses by visiting <a href="http://www.yourfreecreditreportnow.com" target="_blank">http://www.yourfreecreditreportnow.com</a>.
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Faqs Bankruptcy Questions You Probably Have About Bankruptcy
Declaring personal bankruptcy is no laughing matter It’s a serious step that you will have to study carefully before making your decision, since filing Chapter 7 or Chapter 13 will affect your family’s finances for a long time to come That’s why this article will cover some frequently asked questions about bankruptcy . .How much does it cost to declare bankruptcy? . . .Well, at the time of this writing, the cost for Chapter 7 bankruptcy filing is $274, while Chapter 13 would cost you $189 Keep in mind this is only the court filing fee and does not include your legal fees . .Has the new bankruptcy law made it more difficult to declare bankruptcy? . .The new bankruptcy law passed in 2005 by Congress and signed by President George W Bush has made the process more complex However, contrary to popular misconception, bankruptcy is still available for many Americans who need help There are some changes such as mandatory credit counseling and having to go through something called a means test in order to determine your financial needs based on income and expenses This was supposed to keep people from abusing the bankruptcy process when they didn’t really need it . .Do you really need a lawyer to declare bankruptcy? . .Following up on the previous question regarding the new bankruptcy law, you have to understand the process has become more difficult You really need a good bankruptcy lawyer who has kept up with all the changes and can give you the best possible advice for your particular scenario Going it alone is really not a good option, and you should make sure that your attorney is paying attention to your needs and answering your particular questions Generic advice is not good enough . .There are many more questions that you probably have regarding bankruptcy, and you would do well to continue to research the process before visiting a lawyer This will help you become more informed so you can make better questions during your visit, and you may even save some money by not wasting time asking the most common questions Keep in mind that a lawyer charges by the hour, and saving money is a good idea if your situation is bad enough to consider bankruptcy .
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