alterations to qualification requirements
In the past, bankruptcy eligibility was in a sense unregulated. People were eligible for Chapter 7 debt elimination if it was determined that their debt load was excessive in comparison to their income. With such lax eligibility requirements, many individuals who could have afforded to repay a portion of their debts were able to have those debts eliminated at no cost to them. Ultimately, it is the borrower's responsibility to repay debts, and needing assistance versus a complete bailout are two entirely distinct issues.
In 2005, the bankruptcy law modifications established new eligibility requirements for Chapter 7 versus Chapter 13 repayment plans. Filers must now pass a """"means test"""", which determines whether their income is less than the state's median income. If the income is less than the state's median income, the debtor may petition for Chapter 7 bankruptcy; if the income is greater than the state's median income, the debtor is only eligible for Chapter 13 bankruptcy. The objective is to eliminate those who have the ability to repay their debts, regardless of the size of their monthly payment.
Changes To Requirements
The bankruptcy procedure is highly structured and requires the debtor to comply with numerous steps. Those who file for bankruptcy protection must now attend and complete a debtor education course, as a result of legal changes. The course is a government-approved financial management program designed to educate tax filers on budgeting, sensible money management, debt relief plans, and the prudent use of credit. The goal is to provide filers with the resources necessary to regain financial control and prevent future bankruptcy filings.
Alterations To The Benefits
In addition to debt relief, bankruptcy provides protection against creditors, evictions, and legal actions for child support or divorce. A bankruptcy filing triggers an automatic stay that prohibits creditors from contacting the debtor. In the past, all petitioners were automatically granted protection under this order. The automatic stay protection has been limited by new laws to credit collection only. Filing no longer halts evictions, child support or divorce proceedings.
A qualified bankruptcy attorney can evaluate a person's financial situation and provide guidance on the best course of action. The alterations in the law could affect the outcome of a case, as bankruptcy is not always the best solution for everyone.
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