Changes to the Bankruptcy Law
Like an uninvited guest that has taken up residency on your couch, the new bankruptcy law is here to stay, and it sure hasn’t won itself over many friends. With good reason too, because now, more than ever before, filing for bankruptcy is going to be difficult and trying at best. Take for example this change: you are now required to receive credit counseling at least six months before you file for bankruptcy. You can be counseled over the phone or on the internet, but you first must get approval from the court on the organization you use and it must be nonprofit. If for some reason you are unable to complete the counseling prior to filing, you might be able to get the court to let you receive counseling thirty days after filing, but you must provide proof for the reason of your extension.
Get ready for miles and miles of paperwork, because you’re going to be digging up some old documents before your bankruptcy hearing is through. Under the new law, you have seven days before your hearing to locate your last tax return. Don’t take this new provision lightly, because unless the court receives a copy of it within the allotted time, your case will be tossed out without exception. The fun doesn’t stop there: you just might be asked to come up with tax returns from the last four year as well and you will have to produce an itemized statement that covers your monthly income. Don’t forget about your pay stubs, because the court will be asking for copies of those, starting sixty days prior to filing.
Before the new bankruptcy law went into effect, many debts were dischargeable when you filed Chapter 7 or Chapter 13, even debts incurred during a divorce. Now, you will find that most debts due to a divorce will be nondischargeable and will still need to be paid back. This includes child support and spousal maintenance.
If you have to file bankruptcy, make sure you learn your lesson the first time, because it’s not going to be as easy to file the second time around. The new bankruptcy law has issued waiting periods before one can file for a second time. With Chapter 7, you now have to ride out eight years before you are able to start the bankruptcy proceedings rolling again, while Chapter 13 is two years.
Filing bankruptcy can still provide you with a fresh start, but it’s not going to be as easy as it once was. Debts, including student loans have been redefined under the new law and they might not be dischargeable anymore. This includes any debts over $500 that you incurred within ninety days before filing.
Ever heard the saying, “a good bankruptcy attorney is hard to find?” Well, if you haven’t, you just might find yourself saying that very thing, because of some provisions within the new law. Your attorney is now going to be held liable for the information you provide them with. In example, if you were to “accidentally” forget to tell your attorney about another source of income or withhold some crucial piece of information that is later brought to light, they, not you, will be fined.
It’s true that the new bankruptcy law has complicated things and made it harder for anyone looking to file Chapter 7 or Chapter 13, but the best way to fight back is to educate yourself on the changes. Finding a great lawyer to help you might be tougher than it would have been last year, but when you do find someone to help you, you can feel reassured that they will know the new law inside and out and that fresh start you wanted will be closer than ever.
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