Chapter 7 bankruptcy laws went through a major overhaul in the recent past which has put a serious crimp in many people's plans to start over. The new laws that were put into effect regarding what is chapter 7 bankruptcy options will substantially increase the number of chapter 13 filings since it is now much harder to qualify for chapter 7. The tough guidelines enacted by lawmakers will quash manipulation of the system by those who wish to wipe out debts that were incurred with no restraint. While many people suffer serious financial hardships at no fault of their own, those who have stacked unreasonably large debt upon debt will now be forced to face the music by submitting to the guidelines of a chapter 13 filing instead.
For those who are considering filing for bankruptcy, it is important to understand what is chapter 7 bankruptcy when it comes to the law. According to the new laws, several things can qualify an individual for this filing and an assessment is made by the courts as to a person's financial circumstances. The IRS has certain allowable limits for necessary living expenses that are assessed such as food and housing. Generally, the food allowance is around $210 and the housing allowance may be upwards of $900. Anyone who spends more than that cannot qualify for chapter 7 bankruptcies. Also, an assessment called a 'means test' is transacted and an individual's earnings are calculated minus a housing and food allowance.
If the subtracted amount of income if less than the mean income in that state, an individual may qualify to file, if not, filing for a chapter 13 will be mandated. These two particular laws put a stop to many people who would otherwise have filed for bankruptcies. When a person files, the current chapter 7 bankruptcy laws determine whether or not he or she must be denied and passed on to a chapter 13 filing. Up until now, many individuals would rather have avoided a chapter 13 because of the strict financial accountability and reorganization of personal finances that become court mandated. For those whose ask, "What is chapter 7 bankruptcy?" the answers have changed as a result of even more legal restraints.
Other changes to chapter 7 bankruptcy laws include restrictions on filing in any state unless a person has been a residence for at least two years. Other changes include mandatory financial counseling and expensive items purchased or cash loans received within 60 days of a petition will have to be repaid in full. In the past, many people attempted to take advantage of some states protective laws regarding assets such as homes and property. In some states, liquidation of personal homes as a result of filings are prohibited. Before filing a petition, some people have moved across state lines to file in another state in hopes of receiving the benefits of that state's laws. Under the new laws, that is no longer possible.
Those who discover more about what is chapter 7 bankruptcy laws will find that financial counseling will be imposed on anyone who advances through the process of filing. Within six months, mandatory counseling must take place as directed by the court. This new requirement of current laws has created an accountability factor that will undoubtedly prove to be useful in resolving debt and educating consumers. An important part of legislation that was enacted that helps creditors is the fact no one is allowed any longer to run up large bills on luxury items or receive cash advances within the last two months before filing for chapter 7. In the past, it has been noted that many people have premeditated their expenditures on luxury products just before filing. They have had their debts written off, but their creditors are left holding the bag. It has proven to be a scam of sorts and current chapter 7 bankruptcy laws have put a stop to that practice. "Submit yourselves to every ordinance of man for the Lords sakes..." (1 Peter 2:13a)
The purpose of allowing petitions to be filed through the courts was originally to provide a way for people to have a new lease on life after suffering serious financial setbacks. Over the past years, the original purposes for bankruptcies have been distorted. In order to halt unfair use of the laws, the recent legal requirements have been passed. Now, many people will be required to file a chapter 13 petition instead which will require greater accountability, repayment of most debts and mandatory fiscal responsibility. In order to understand what is chapter 7 bankruptcy requirements for individuals who wish to file, there are many online sources that can further expand the topic for anyone who needs assistance.
http://www.christianet.com/bankruptcy/chapter7bankruptcylaws.htm
