Do New Bankruptcy Laws Present You With New Challenges?

Do New Bankruptcy Laws Present You With New Challenges? """The brand new changes to the bankruptcy regulations may present you with new challenges. They were enacted in 2007 with the expectation that a more stringent set of bankruptcy laws would result in less exploitation and more payback. In the past, the Federal Bankruptcy laws were relatively lenient in the sense that any individual could easily apply, be accepted, and have their entire credit wiped clean without any repayment of prior debts.

The new laws have abruptly put an end to the credit card game in which individuals would rack up hundreds of thousands, if not millions, of dollars in credit card charges knowing full well that they could file for bankruptcy and have the debt wiped clear. For decades, it was a cakewalk for many people who would declare bankruptcy twice or even three times in twenty years.

The new bankruptcy laws make it more difficult for high-income tax wage earners to file for bankruptcy and obtain a 'no repayment' Chapter 7 discharge. These high-income earners must now file for Chapter 13 reorganizations, as their personal or business credit files indicate that this is the proper chapter to select. The State or Federal Government functions as the 'Executor of the Estate' and sells whatever assets it can to pay off the deceased debtor's creditors in descending order.

Under previous bankruptcy laws, a person could choose the form of bankruptcy that seemed most advantageous to them, regardless of their income level or amount of debt. The individual has no option under the new bankruptcy laws and must file under Chapter 7 or Chapter 13 depending on their income bracket. This has closed the exemptions that allowed the wealthy to become wealthier by simply declaring bankruptcy when their credit card debt and/or mortgage debt exceeded their ability to make monthly payments.

As with any significant change in the federal government's judicial and financial sectors, there will be casualties. The means test is a test that determines whether an individual or corporation is able to repay some past-due debts and be placed in Chapter 13 or is unable to repay anything and be granted Chapter 7 bankruptcy. The bankruptcy laws for the 'working-class' in the United States are essentially the same as they were twenty years ago for the average citizen in the middle-income bracket.

The primary difference between today and even five years ago is the presence of a ""means test"" and counseling requirements that must be met before and after the bankruptcy is discharged or dismissed. Researching the law and ensuring that you comprehend every step is the best method to determine how additional changes to the new bankruptcy law will affect you.

" - https://www.affordablecebu.com/