New Bankruptcy Law – Does Filing for Bankruptcy Impossible?

If you are in a financial mess with creditors harassing you day and night, one day you may consider filing for bankruptcy as the only way out of their situation. However, you may have heard people say that changes in the bankruptcy law make it impossible to declare bankruptcy today.

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 or simply called the New Bankruptcy Law may seem stricter than before, but that does not mean that bankruptcy is not an option for those who deserve it.

There are some provisions of the new law may seem complex to understand, but you really can leave the nitty gritty details of your attorney. There are only three things you need to know if you’re considering bankruptcy:

1. Means test. You will be asked to take a “means test” which will tell the court if you are really unable to pay its debts. Your income is assessed the average income of people in your state and if it falls below this reference, then it means that you pass the test. However, if your income is above the average income in your state, then you would have to provide evidence that after paying their living expenses, and not have enough to pay their debts.

If the bankruptcy court is still ineligible for a Chapter 7 bankruptcy or pardon all of your debts, you can pass a Chapter 13 bankruptcy for you. This type of bankruptcy requires you to agree to pay their debts over a period of 3-5 years.

2. Financial Advisory. The new bankruptcy law requires you to take sessions on personal finance and credit management within 180 days before filing. Congress passed this make sure you go out of their experience of bankruptcy as a more mature and responsible borrower. In reality, this will benefit in the long run, because the training will help you get rid of bad spending habits and prevent you from falling into another trap of bankruptcy in the future.

3. The increase in legal fees. Because the new bankruptcy law is more complicated than before, the lawyers have raised their rates to compensate for more work involved in the submission process. There are also more responsibility for law firms in the event that your client is trying to bankruptcy fraud is another reason that bankruptcy lawyers are charging more.

You may be able to reduce the fees of counsel by his attorney’s work is less demanding. You can do this by preparing all the documents that your attorney may be necessary and through the exercise of transparency regarding its financial activities in the past.

May require more work to file bankruptcy than before, but there’s no doubt that you are eligible, the court still granted to you. The important thing is to know in advance what the law requires you to succeed in bankruptcy.