Important Bankruptcy Laws
Recently, The US government made a law that does not allow you to just file a chapter 7 and get out of all your financial obligations. This is not going to just wipe out your debt.
The thing is that people are being careless with their many credits and debts, but they just think that if they file a chapter 7, everything will go away. Now, you are not allowed to choose what code you want to file your bankruptcy and your income matters a lot. There are just many more restrictions.
Many people spent years being careless with their credit and debts because it could be fixed with a quick filing for bankruptcy.
One of the biggest changes is that now those with a higher income will have to file under chapter 13 and therefore pay off some of their incurred debt. The new law also has placed new restrictions on bankruptcy lawyers. It may be tougher now to find a lawyer who will represent you in a bankruptcy case.
You’ll also find that in addition to the restrictions there is also some counseling that is mandated and you have to go before and after filing for a chapter 7 bankruptcy.
Pre-filing, individuals must complete credit counseling and post-filing, they must complete financial budgeting. These should have been implemented years before. It was meant to allow people to see their spending habits and then help them to get on some type of budget and track so that they can stay out of bankruptcy in the future.
There is also a change for chapter 13 filers. Keep in mind, there is a new income rule. All disposable income left after paying actual living expenses must now go into their repayment plan.
Now, it is the IRS that will determine what your allowed living expenses are and also they will base their judgment on rather or not your income is higher then the median income of your state.
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