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Understanding the New Bankruptcy Law |
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On October 17, 2005, a new bankruptcy law went into effect. The purpose of the bankruptcy was to restore some fairness into the bankruptcy law in terms of who could qualify. Congress had become convinced that many people were taking advantage of the system under the old law in order to get out of paying debts they could afford to repay. The new law makes it more difficult to qualify for a bankruptcy, but it also places a heavier responsibility on the bankruptcy attorney. The new bankruptcy law changed the old law in several important areas. For one thing, the new law resulted in more people qualifying for a chapter 13 filing rather than a chapter 7 filing. Under the chapter 7 filing, all of the debtor assets are liquidated and used to repay the creditors. In many cases, debtors have no assets except their house or car and so the creditor gets very little or nothing. A chapter 13 filing is a repayment plan which forces the debtor to repay as much debt as possible between 3 to 5 years. The new bankruptcy law also established new calculation rules and made it more difficult |
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