An Overview of Bankruptcy And The Changes in Federal Laws
Bankruptcy law is governed by federal and state statutes that give protections
to both the debtor and the creditor. The law defines a way for debtors
to get out of debt without harming their ability to lead a productive
life in the future.
Federal bankruptcy laws were updated in 2005, under the Bankruptcy Abuse
Prevention and Consumer Protection Act (BAPCPA), which was passed to make
it more difficult for individuals to file for bankruptcy. It eliminated
the automatic eligibility to file for
Chapter 7 bankruptcy and forces the repayment of some of an individual's debt under
Chapter 13 bankruptcy. Until 2005, most personal bankruptcy cases were filed as Chapter 7 Bankruptcy
because debts were
discharged and did not have to be repaid. A "
Means Test" was added to the law so that those with the means to pay some of
their debts now must file for Chapter 13 Bankruptcy. Under Chapter 13
bankruptcy, an individual must develop a repayment schedule for debt repayment.
These payments are generally made over a 3 to 5 year period. The discharge
under Chapter 13 bankruptcy is not issued until the last payment has been
received by the bankruptcy trustee.
Changes to the federal bankruptcy laws also created the requirement that
everyone seeking bankruptcy protection must undergo
credit counseling before filing for Chapter 7 or Chapter 13 bankruptcy. Those who have filed
bankruptcy must also go through an additional budget and credit counseling
prior to the discharging of debt. It also increased the fees and the paperwork
necessary for filing.
Want to file for bankruptcy? Contact Price Law Group
online or call 866-210-1722 for a free consultation.