Keeping in view the increasing number of bankruptcy frauds, various new bankruptcy laws have now been included in the bankruptcy code of the United State. The bankruptcy laws have always been a complex one and now, with the inclusion of these new laws, the complexity has risen to a great level only. Still, if you are planning to file for bankruptcy, or if you are a creditor and are concerned about the money, you have lent, it is important for you to be aware of the main changes that have been brought by these new bankruptcy laws. To start with, you must note that the new bankruptcy laws have come into effect by October 17, 2005. Following are some of the major changes:
Passing the Means Test Is Mandatory For the Debtors
Since, the debtors have caused most of the bankruptcy frauds; the new bankruptcy laws, have in fact, tried to safeguard the creditors. Now, it is a matter of the past, when the debtors had the freedom to choose the kind of bankruptcy they want to file, court petition for. The new bankruptcy laws have now made it mandatory for the debtors, to pass the means test before filing bankruptcy. The means test is a procedure, in which the available sources of income of the debtors are assessed. You are supposed to evaluate your total income and expenses. Now, you should deduct the expenses, and see how much money is left with you, after paying off all the necessary expenses. Is this amount sufficient to pay off the monthly installments of the debts you owe? If the money left with you is very little, and much less than the median income of the state, you can qualify for chapter 7 bankruptcy. On the other hand, if this amount is greater than the median income of the state, your only available option will be to file for chapter 13 bankruptcy or to go for any bankruptcy alternative.
Credit Counseling
The new bankruptcy laws have also made it mandatory for the debtors to go through a government-approved credit counseling service. The purpose is to make sure that there are no bankruptcy alternatives available to you. The credit counselor will review your financial situation and the amount of debt you owe to various creditors. If the credit counselor finds that a debt consolidation service might bring a solution for you, you will not be able to file for bankruptcy. In that case, your bankruptcy petition will be rejected and the bankruptcy court will ask you to pay the debts through a debt consolidation service.
New bankruptcy laws have come into effect from October 17, 2005. As per the new laws of filing bankruptcy, now it is mandatory for the debtors to go through the means test and a credit counseling service, before embarking on a filing bankruptcy process. It is essential, in order to make sure, whether you qualify for chapter 7 bankruptcy or chapter 13 bankruptcy. To know more about bankruptcy and related issues such as bankruptcy attorneys, bankruptcy costs and more visit Filing Bankruptcy
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