The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, also known as the New Bankruptcy Law, may appear stricter than in the past, but that does not mean that bankruptcy is no longer an option for those who qualify.
Certain provisions of this new law may appear difficult to comprehend, but you can actually delegate the understanding of these provisions to your attorney. There are only three things you need to know if you are contemplating bankruptcy:
1. Means Test. You will be required to take a ""means test"" that will indicate to the court whether you are truly unable to repay your debts. Your income is compared to the median income of residents in your state; if it falls below this threshold, you pass the test. If, however, your income exceeds the state average, you will be required to provide additional evidence that, after paying your living expenses, you are unable to pay off your debts.
If the bankruptcy court determines that you are still ineligible for a Chapter 7 bankruptcy or full debt forgiveness, it may grant you a Chapter 13 bankruptcy. This form of bankruptcy requires that you agree to repay your debts over the course of three to five years.
Financial Counseling. The new bankruptcy law stipulates that you must attend sessions on personal finance and credit management within 180 days before submitting. Congress enacted this measure to ensure that you emerge from the insolvency process as a more mature and responsible borrower. This will be beneficial in the long run, as the training will help you eliminate bad spending patterns and prevent you from falling into the bankruptcy trap again in the future.
Increased attorney fees. Due to the increased complexity of the new bankruptcy law, attorneys have increased their fees to compensate for the additional labor involved in the filing process. There is also increased liability for law firms if their client is discovered to be attempting bankruptcy fraud, which is another reason why bankruptcy attorneys are charging more.
You may be able to reduce your attorney's fees by making his or her task easier. You can accomplish this by preparing all the documents your attorney may require and by being transparent about your past financial activities.
It may require more effort to petition for bankruptcy today than in the past, but if there is no doubt about your eligibility, the court will still grant it. To successfully file for bankruptcy, the only thing that matters is knowing beforehand what the law requires.""
" - https://www.affordablecebu.com/