Getting A Handle On Bankruptcy Law

Getting A Handle On Bankruptcy Law "There have been dramatic changes to the Bankruptcy Law in the United States presently. Therefore, it is crucial that everyone be aware of these alterations in the event that they find themselves in a position where they must file for bankruptcy.However, before we examine the main changes that have occurred, we must explain the various types of bankruptcy that are now available.Chapter 7 bankruptcy is the most prevalent form of personal bankruptcy. Once a Chapter 7 bankruptcy petition has been submitted, a trustee is appointed to manage the debtor's property and assets. If possible, they will secure some of the individual's assets so that they can be sold and the proceeds used to repay the individual's creditors. Typically, after filing a Chapter 7 bankruptcy, a person will discover that the majority of their debts have been completely discharged, although many do not realize that not all debts are eliminated.Chapter 11 - This form of bankruptcy filing is typically used by businesses, but individuals can also file under this chapter. However, because this form of bankruptcy can be costly and complicated, few individuals choose to utilize it. Also, the individuals most likely to file for Chapter 11 bankruptcy have debts that exceed the limits established for Chapter 13 bankruptcy filings. Nonetheless, this form of insolvency allows a business to continue operating while shielding it from some (though not all) of its debts.Chapter 13 - In a Chapter 13 bankruptcy, a person will propose a repayment plan to repay all of their creditors. The court will then appoint a trustee, as it does in Chapter 7, and this trustee will collect payments from the Chapter 13 debtor and distribute them to the debtor's creditors. The trustee appointed to a Chapter 13 bankruptcy filing is primarily responsible for ensuring that the debtor adheres to the repayment plan at all times. Note that your debts are not eliminated in this instance.Now that we have examined some of the types of bankruptcy that can be filed, we will examine the changes that have occurred in bankruptcy law. The most significant modification concerns who can truly file for bankruptcy under Chapter 7. Changes to the law now prohibit those with significantly higher incomes from utilizing Chapter 7.In order to determine whether a person can truly file for Chapter 7 bankruptcy, a means test must be performed. If it is determined that their income is greater than the area's median income, they will be required to file for Chapter 13 instead.Additionally, under the new bankruptcy law, all debtors will be required to receive credit counseling before filing for bankruptcy. In addition, you will need to undergo additional budgeting and debt management counseling before your debts can be eliminated or your assets liquidated.
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