|
Author: Douglas Hanna Article source: http://www.bankruptcycentral.info/. Used with author's permission.
On April 20 of this year, President Bush signed a bankruptcy reform law. When this law went into effect in October it made it much more difficult for Americans to use Chapter 7 bankruptcy to get a fresh start on their financial lives.
Under the old law, you could choose to file either a Chapter 7 or Chapter 13 Bankruptcy. In a Chapter 7 proceeding, you are allowed to keep your exempt property, such as much of the equity in your home. Most of your other debts, such as money owed on credit cards, are discharged.
In comparison, a Chapter 13 Bankruptcy is a reorganization bankruptcy. In this type of proceeding you agree to pay off your debts over a period of three to five years.
The result of the new law is that fewer people will be able to file for Chapter 7 Bankruptcies and will be forced to file for Chapter 13 Bankruptcies, instead.
Major Changes
Possibly the biggest change to bankruptcy law is that there will now be a qualifying test. Under this two-part test, you will first be required to apply a formula that exempts certain expenses such as food, rent, etc., to see if you can afford to pay 25 percent of your "non-priority unsecured debt" (credit cards, medical bills and the like). Second, your income will be compared to your state's median income.
If your income is above your state's median income, and if you can afford to pay 25 percent of your unsecured debt, you will not be allowed to file for a Chapter 7 Bankruptcy.
You may be able to file for a Chapter 7 Bankruptcy if your income falls below your state's median income but you can pay 25 percent of your unsecured debt. However, if the court believes you would be abusing the system by filing a Chapter 7, you can be required to file for a Chapter 13 Bankruptcy, instead.
More differences
If you filed a Chapter 7 Bankruptcy under the old law, the court would determine what you can afford to pay based on what you and the court determines are reasonable and necessary living expenses.
Under the new law, the court is required to apply living standards that are derived by the Internal Revenue Service to determine what is reasonable to pay for rent, food, etc., and how much you should then have left over to pay your debts. The IRS regulations are more stringent and if you want to contest them, you will need to ask for a hearing in front of the bankruptcy judge. This can easily mean more time and expense.
Tougher exemptions
When you declared bankruptcy under the old law, your state might have allowed you to keep all or much of the equity you have in your home. However, the new law places tougher restrictions on this exemption. So before you file, be sure to discuss this with a knowledgeable bankruptcy attorney so that you will know exactly how much of your home's equity you can expect to protect.
Credit counseling
Here's another tough restriction. Under the new bankruptcy law, you must meet with a credit counselor in the six months before you apply for bankruptcy. However, from what I have read, many of the "certified" counselors are totally backed up and cannot handle any new cases.
You must also attend money management courses - at your expense - before your debts are discharged.
Before you do anything, make sure you talk to a good bankruptcy attorney. Have you heard about HD radio technology? It makes AM sound as good as FM and FM sound almost like you were listening to a CD ... and its free! To learn more about this amazing new technology, just go my Web site, http://www.hd-radio-home.com, to get all the buzz. Douglas Hanna is a retired marketing executive and the author of numerous articles on HD radio and family finances.
How To Set Up an Ezine Encyclopedia
Do you read all your Ezines? Or do you file them
away in special folders and then forget about them?
Nevada Real Estate – A Very Good Gamble!
When you think of Nevada, Las Vegas and gambling are the first things to come to mind. In truth, Nevada real estate is a far better bet than anything you'll fin...
Common Decency......Lets Keep it Alive!
I recently had an experience with one of the affiliate programs I *was* involved with. This experience did not surprise me, but did however, disappoint me. I...
How Can I Break Into Cliques?
Have you ever gone to a networking function and seen THE person who you feel could help you most there, except that person is surrounded by people ALL the time?...
Adsense Authors: Who Are These People?
Adsense is a program designed by Google to help publishers monetize their websites using high contextually-accurate ads. Adwords is the other side of the coin w...
What is a Bridging Loan?
A bridging loan as the name implies is a loan used to "bridge" the financial gap between monies required for your new property completion prior to your existing...
The Big Choice
The Big Choice
Five Tips to Obtain Credit for Small Businesses
Obtaining credit is necessary for many small businesses. Knowing what steps to take in this process can greatly increase an approval from a financial institutio...
Is Your Site Ready For The Coming RSS Revolution?
Are You Ready For The Coming RSS Revolution? Recent
major developments by Microsoft and Google have
placed RSS into the spotlight. Developments that will
change...
The Golden Moments in Life
What defines your golden moments in life? Do you believe that the golden moments in life are things that just happens? Well that is not the case of things at al...
All You Want is Within Your Reach
If there is one thing that I believe with all my heart it is that you can
have any life you choose to. You can live the life you have always dreamed
of.
Warning! Meeting In Progress; May Be Hazardous To Your Career
Most meetings burn up resources that could be spent on useful purposes. These
sessions are either not necessary, or they are so poorly organized and conducted ...
Main Dish Zucchini Recipes
Looking for some ways to use up your summer zucchini? Here are some main dish recipes your family is sure to enjoy.
Professional Tips For An Instant Makeover
Quickly improve and enhance your appearance by appling these 5 simple techniques used by the top professionals in the beauty and image industries.
Workplace Melodrama--A Flair For The Dramatic
In the workplace, melodrama happens when a minor concern or conflict is embroidered and overstated in such a way that it becomes larger-than-life and blown way ...
Our Pets Behavior
Find out some reasons why your dog or cat may be misbehaving, and what you can do about it as an owner.
Tips for a Positive Mental Attitude
Always, keep your face to the sun,
and shadows will fall behind you.
In the Blink of an Eye
None of us ever think about the time slot of a blink of an eye. Yet so much of life happens just there.
Go On ! Give your Enemy a Hug
Ever thought of giving your enemy a hug? It will have amazing results.
Choose The Right Savings Account
Once you've found the right checking account, you'll want to start looking for the right savings account. You should only keep the minimum balance in your check...
Olympus Digital Cameras - Digging Into The History
One of the oldest companies, Olympus has had a long and historical journey. Olympus digital cameras are being used all over the world today. Let us take a look ...
Debt Consolidation with Free Government Grants? One Scam to Avoid
Various companies in the print media, radio and television are promising "free grant money" for debt consolidation purposes. Is this for real?
How Did This Happen to Me? Top 10 Ways to Get Spyware or Viruses on Your Computer
If you use the internet, you have probably been infected with a virus, trojan or spyware. Many people want to know what they did to get infected. Unfortunately,...
Own Your Dream Home Without Getting Finance: Real Estate with No Credit Checks
I certainly don't advocate using real estate for pleasure until you can afford to buy it outright, but if thats what you want read this article.
|
Print this page