The New Bankruptcy Law - What Has Changed?

By Chris Safin

People used to say that the old bankruptcy law from 1978 was very strict, those people now would certainly be in for a shock when they see just how much stricter the all-new bankruptcy law now is.

So what are the main changes that have been made to the new bankruptcy law?

In order to make sure that only the most in need people qualify for bankruptcy, the government has created what they call the means test.

In the Means Test your monthly income is considered, minus certain expenses that are allowed. If you come out above the ?median income? you will have to file for Chapter 13 bankruptcy.

There are a series of strict guidelines set up by the IRS dedicated to your allowable expenses. For instance, you will be limited to 800 $ for all your housing costs each month and you will also be limited to 200 $ each month to pay for your food.

Obviously in each state of the United States of America the laws do tend to change a little, depending on the state you reside in, this may help you or it may hinder you.

You will have to attend a mandatory credit-counseling course that has to be approved by the IRS within 180 days of your filing for bankruptcy. This is not a free course. Instead it will cost you approximately $75.

Under the all new bankruptcy law there is now more paperwork that you will have to do so that you can prove that bankruptcy is necessary.

The IRS will want to see among other things, a complete list of all of your secured and unsecured creditors, a list that details where all your income is coming from and where your expenses are coming from, a recent tax return and naturally your photo ID.

Thanks to the new law, you are going to have to pay a considerable amount more on your bankruptcy attorney. This is thanks to the fact that there is now a whole lot more work for your bankruptcy attorney to do.

Interpreting the bankruptcy law

By law you are not obligated to use the services of a bankruptcy lawyer, however it is certainly highly recommended that you do in less of course you have qualifications in this area.

You do not want to go through this in an attempt to save yourself some money since it will only come back to haunt you in the end. Therefore, it really is in your best interest to have an experienced bankruptcy attorney interpret the bankruptcy law for you.

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