New Bankruptcy Laws

[HopefulInOhio]

I had a friend tell me today they have no idea how I'm gonna file bankruptcy along with my divorce - and that the laws for wiping your debt away are gone. What are the circumstances that you can do this? Am I missing something here??

There is no way I can pay this back or even put it on a payment schedule. Hopefully, I'm not being told right.

[BK'd-Betty]

Your friend is wrong - misinformed - brain washed by the credit industry. (part of the propaganda of the new laws)

Just read the Chapter 7 forum, there is living proof!

I had a friend tell me today they have no idea how I'm gonna file bankruptcy along with my divorce - and that the laws for wiping your debt away are gone. What are the circumstances that you can do this? Am I missing something here??

There is no way I can pay this back or even put it on a payment schedule. Hopefully, I'm not being told right.

[HopefulInOhio]

That's what I thought. You'll find most people that say that have never filed it nor read up on the laws....

[BK'd-Betty]

Exactly! Most people no nothing about BK, the process, the laws and may not even know it's available.

But what your friend does "know", or at least what he said to you - is EXACTLY what the credit industry was trying to achieve.

The laws did change, and there is more documentation required, and they have some new guidelines as to income requirements, etc. More people are being put in a 13 than before, but even under the old laws, many Chapter 7 filers were forced into 13's.

Chapter 7 is still available to debtors and frankly, the new laws only achieved a short term slow down of BK filings in this country.

That's what I thought. You'll find most people that say that have never filed it nor read up on the laws....

[HopefulInOhio]

Thanks.......I hope all goes well for a 7 for me. I'll collect every last piece of paperwork they need to make it all go smoothly. With my divorce and my income, I just don't see why a 7 won't go for me.

[CATCHMEIFYOUCAN]

The new bankruptcy law that took effect October 2005 made bankruptcy paperwork harder, but bankruptcy eligibility is easier.

If you are planning to file bankruptcy, many people will give you the wrong idea about bankruptcy. Those people think that bankruptcy is some kind of punishment because you cannot pay your bills. That's completely wrong.

The purpose of bankruptcy is to provide a fresh start to honest debtors. As long as you did not lie on your credit applications or hide valuable property, the bankruptcy court will help you get a fresh start in life.

"A new opportunity in life and a clear field for future effort"--That's what the Supreme Court says.

Congress has tightened up bankruptcy for a few people and added new requirements for everybody. (You have to talk to a credit counselor; you have to attend a class on financial management.) But, for most people, bankruptcy still works.

The new bankruptcy law sets a new test for eligibility to file Chapter 7 bankruptcy. Instead of looking at your budget to see if you can afford to pay, the court now looks at an average budget to see if you should be able to afford to pay.

Using this average budget instead of your real budget will mean some people who really can't afford to pay will be told to pay anyway. But for most people it will make eligibility easier, not harder. Why's that?

This new budget does take into account the cost of living in high cost of living areas, like Northern Virginia. The new law gives you a reasonable allowance for paying Northern Virginia rents, and it gives some adjustments for the long commutes many people have here. (Not enough to cover three dollar a gallon gas, by the way.) The cost of living is factored in somewhat on your allowed food budget and clothing budget, too. All that means for most people in this area, the new law doesn't restrict eligibility--it makes it easier.

Good Luck, Catchmeifyoucan