Beginners Guide to Bankruptcy Law

Gone are the days when people will go for bankruptcy once they see themselves facing an escalating amount of debt.

There is now the new bankruptcy law, which changes the conventional meaning of the word “bankruptcy”. It was April 20, 2005 when George Bush signed the law about “Bankruptcy Abuse and Consumer Protection Act”.

Some people would say that this new law is nothing but unfair rule given by the government again, so lets dig further to the real details about comparing the present and the previous law.

Based on the US Bankruptcy Courts, the main reason behind the creation of the previous law is to offer an honest debtor the chance to start a new life again by relieving their debts and this will also help repay creditors as well as banks in a more efficient manner. On the other hand, the mere purpose of the new law is to repay banks as well as creditors in the right manner as long as the debtor has property available that will be used as payment. But the new law never suggests that debtors will be given the chance to start a new life.

Most finance companies would agree that the old law only allows people to abuse bankruptcy law. They say, almost all people who face this kind of financial problem are those that are nevertheless irresponsible when it comes to their finances. These people are those who only shopped or even gambled their cash away hence the new law will eliminate the chance of filing for bankruptcy for personal gains.

The new bankruptcy law would apply a means test for those people who are filing for bankruptcy. In case the debtor has $100 each month, which is left after the IRS was able to determine the monthly expense plan, then the debtor is forced to pay for five years and file Chapter 13.

Just try to consider the life waiting for people after this new bankruptcy law.

People are not allowed to file Chapter 7 of the Federal Bankruptcy code that will work to eliminate their entire unsecured debt.

Basically, in the new bankruptcy law, there are no provisions for debt problems created by illness, job loss, and other kinds of traumatic events although some studies suggest that these are the cause of some of bankruptcy cases.

Furthermore, with the new law, attorneys are responsible to the veracity of paperwork given by their clients. This simply means that your attorney must be able to search the client’s entire house upside down for possible family heirlooms. This will of course result for the decrease of bankruptcy attorneys or they will simply raise their fees just to cover up all the stress that they need to do for their client.