Bankruptcy And How The New Laws Affect You

 By: Leeanne Kunnert
If you are considering personal bankruptcy it is important to understand the laws and how they affect your situation. New bankruptcy laws have been put into place to help individuals get out of their current situation before they have to resort to filing for bankruptcy.

New bankruptcy laws make credit counseling mandatory within one hundred and eighty days of an individual filing for bankruptcy. Individuals must relay all pay stubs that are received within the sixty days prior to bankruptcy be filed with the court. All creditors owed are entitled to a copy of the individuals most recent tax returns. Filing individuals must attend financial management classes after filing for bankruptcy.

Before filing for bankruptcy under the current laws it is important to take a long hard look at your financial situation. Answer the following questions honestly to determine if you really should consider bankruptcy and which option is best for you.

Is it reasonable to expect that your debt can be paid off completely within three years while maintaining a tolerable standard of living? If the answer is yes then you are most likely on a solid financial foot and just need to adjust the way you are currently living to fit your current situation. If you cannot reasonably expect to be debt free in three years with a bit of adjusting to your current spending than you should look into the option of bankruptcy.

With chapter 7 bankruptcy many of your debts are forgiven immediately. You will need to surrender any and all non exempt property. It is important to note that ninety six percent of filers do not lose any assets when filing for chapter 7 bankruptcy. Chapter 13 bankruptcy allows you to pay a portion of your debt back over the course of three to five years. The type of bankruptcy you can file for will be dependent upon your current finances.

If your median income is greater than the median income for your state you may chose to file chapter 13 bankruptcy with a five year repayment plan. A chapter 7 bankruptcy with an income greater than the state median may be dismissed if your debt is mostly consumer debt and you flunk the Means Test. If your income is lower than the state median then you automatically fail the Means Test. This means if you choose chapter 13 bankruptcy your repayment plan will only span three years. You will not be committed to spending all of your disposable income to a five year repayment plan.

Do you need time to catch up on your mortgage? Do you have nonexempt property you wish to keep? Do you owe taxes or support payments that you need time to pay off without the hassle of creditors? The rules vary from state to state but generally homesteads, pensions, cars and household goods are all exempt. If you answered yes you may consider chapter 13 bankruptcy. If your income is greater than the state median you have to pay on your repayment plan for five years; if it isn't the three year plan is your only option when filing for chapter 13. If you answer no to these questions than chapter 7 bankruptcy is the better option.

To get more information on bankruptcy and the process, call to set up an appointment to meet with a qualified bankruptcy attorney today. Your financial future depends on hiring the right person to represent you throughout the bankruptcy process.
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