If you are considering filing Bankruptcy in Pennsylvania and you are doing some of your preliminary research online, it is likely that you have come across information references the "Bankruptcy Law Changes of 2005."
While several Bankruptcy lawyers serving Pennsylvania reference these changes within their literature, commercials and website - it often leaves you asking "What are the ACTUAL changes ?"
We have you covered... here is a basic breakdown of KEY changes under the New Bankruptcy Law, which took effect on October 17, 2005:
Chapter 7 vs. Chapter 13:
In a Chapter 7 bankruptcy, your assets (as allowed by your State) are liquidated and given to creditors, and many of your remaining debts are cancelled, giving you what's often referred to
as a "fresh start."
In a Chapter 13 bankruptcy, you're put on a repayment plan of up to five
years. Any debts not addressed by the repayment plan don't have to be paid.
According to CNN reports from 2005 , "Under the new law, fewer people will be allowed to file under Chapter 7; more will be forced to file under Chapter 13".
You should always consult a licensed Pennsylvania attorney who specializes in bankruptcy legal services BEFORE you make a determination which form of bankruptcy is BEST for you.
The law was put into place by lawmakers to prevent consumers from abusing the bankruptcy laws -- using bankruptcy as a method to clear debts that they can in fact, afford to pay.
A qualifying test: Under the old law, the judge could determine if
your case qualifies for Chapter 7 bankruptcy.
Under the new law, there is a different method in place to test your qualification.
Contact Foster Law Offices for more information.
Under the old law, the court had greater latitude in deciding whether debtors
may file for Chapter 7 in consideration of extenuating personal circumstances.
The new law lets debtors try to make the case that theirs are "special
circumstances" in which a crisis beyond their control forced the bankruptcy
filing. If the court agrees, they are more likely to be allowed to file for
Chapter 7, even if they don't technically qualify for it as a result of the
means test.
Determining what you can afford to pay: Under the old law, if you
filed for Chapter 13, the court determined what you can afford to pay based on
what you and the court deem to be reasonable and necessary expenses.
Under the new law, the court will apply living standards derived by the IRS
to determine what is reasonable to pay for rent, food and other expenses to
figure out how much you have available to pay your debts. The IRS regulations
are more stringent, and to contest them means asking for a hearing from a judge,
which can mean more time and expense, Elias said.
Tougher homestead exemptions: Under the old law, when you declared
bankruptcy, the amount of your home equity that was protected from creditors was
determined by the state where you filed. In Florida, for instance, your home
would have been entirely exempt, even if you bought it soon before filing.
Lawyer liability: Under the new law, if information about a client's
case is found to be inaccurate, the bankruptcy attorney may be subject to
various fees and fines.
THIS ARTICLE IS MEANT TO SERVE AS A REFERENCE ARTICLE ONLY. READING THIS ARTICLE DOES NOT CONSTITUTE A CLIENT-LAWYER RELATIONSHIP, AND IT IS SUGGESTED THAT YOU CONTACT A LOCAL, LICENSED BANKRUPTCY ATTORNEY FOR A PERSONALIZED CONSULATION PRIOR TO FILING BANKRUPTCY.
9:29 PM
MrDebtBuster
Posted in
Bankruptcy Sweet 16
