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Understanding the New Bankruptcy Law
from: Deb St. George - HomelessInKingCounty.comOn October 17, 2005, a new bankruptcy law went into effect. The purpose of the bankruptcy was to restore some fairness into the bankruptcy law in terms of who could qualify. Congress had become convinced that many people were taking advantage of the system under the old law in order to get out of paying debts they could afford to repay. The new law makes it more difficult to qualify for a bankruptcy, but it also places a heavier responsibility on the bankruptcy attorney.
The new bankruptcy law changed the old law in several important areas. For one thing, the new law resulted in more people qualifying for a chapter 13 filing rather than a chapter 7 filing. Under the chapter 7 filing, all of the debtor assets are liquidated and used to repay the creditors. In many cases, debtors have no assets except their house or car and so the creditor gets very little or nothing. A chapter 13 filing is a repayment plan which forces the debtor to repay as much debt as possible between 3 to 5 years.
The new bankruptcy law also established new calculation rules and made it more difficult to use the homestead exemption. The new calculation rule uses the IRS standard of living numbers to determine your net income figure. The IRS living standard amounts usually are often lower than what you actually spend. The homestead exemption refers to the fact the new law has placed greater restrictions on which state exemption you can use as determined by your length of residence. A bankruptcy attorney will carefully determine the status of your homestead exemption during the filing process.
Another addition to the new bankruptcy law is the requirement that debtors take a money management course and get 90 minutes of credit counseling. This process has been streamlined in that there are many ways to fulfill these requirements online.
One of the major changes in the new bankruptcy law is the establishment of an income means test. The means test is how the courts will determine if you should be allowed to file a chapter 7. Under the means test, your income will be compared to the state median income in the state in which you live. Then your income will also be used in a formula that will determine if you can pay at least 25% of your net income to pay off unsecured debt. If you can, and your income is over the median, then the court will probably make you file a chapter 13 unless you can prove you have unusual circumstances.
This is just a quick snapshot of the new bankruptcy law changes effective October 2005. Of course, there are many other complex aspects to the law that only an attorney is qualified to interpret. Though the new law is more stringent than the old, it still gives millions of people a fresh start.
Chapter 11 Bankruptcy News
Houghton Mifflin files for Chapter 11 bankruptcy protection
Houghton Mifflin lost $2.18 billion last year, including a $1.67 billion writedown, as sales fell, Reuters reported. read more
Read more...Houghton Mifflin files Chapter 11 bankruptcy
Houghton Mifflin Harcourt Publishers Inc, whose textbooks have been a staple in American schoolhouses for decades, filed for Chapter 11 bankruptcy protection on Monday after agreeing with creditors to ...
Read more...Houghton Mifflin files for bankruptcy protection
Houghton Mifflin Harcourt Publishers Inc. has filed for Chapter 11 bankruptcy protection after reaching an agreement to eliminate $3.1 billion of its debt.
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Read more...Textbook company Houghton Mifflin files Chapter 11 bankruptcy
Houghton Mifflin Harcourt Publishers Inc filed for Chapter 11 bankruptcy protection on Monday after the struggling textbook publisher agreed with its creditors to eliminate about US$3.1-billion of debt
Read more...Houghton Mifflin Harcourt files for Chapter 11 bankruptcy
Houghton Mifflin Harcourt officially filed for bankruptcy this morning, according to Publishers Weekly. The book publisher, which has been struggling
Read more...Houghton Mifflin files for Chapter 11 bankruptcy
Houghton Mifflin Harcourt Publishers Inc., which has offices in south Orlando, filed for bankruptcy protection Monday after the textbook publisher reached an agreement with a majority of its creditors to cut about $3.1 billion of debt.
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