Welcome to Bankruptcy Guide
Bankruptcy Software Article
. For a permanent link to this article, or to bookmark it for further reading, click here.
Understanding the New Bankruptcy Law
from:On October 17, 2005, a new bankruptcy law went into effect. The purpose of the bankruptcy was to restore some fairness into the bankruptcy law in terms of who could qualify. Congress had become convinced that many people were taking advantage of the system under the old law in order to get out of paying debts they could afford to repay. The new law makes it more difficult to qualify for a bankruptcy, but it also places a heavier responsibility on the bankruptcy attorney.
The new bankruptcy law changed the old law in several important areas. For one thing, the new law resulted in more people qualifying for a chapter 13 filing rather than a chapter 7 filing. Under the chapter 7 filing, all of the debtor assets are liquidated and used to repay the creditors. In many cases, debtors have no assets except their house or car and so the creditor gets very little or nothing. A chapter 13 filing is a repayment plan which forces the debtor to repay as much debt as possible between 3 to 5 years.
The new bankruptcy law also established new calculation rules and made it more difficult to use the homestead exemption. The new calculation rule uses the IRS standard of living numbers to determine your net income figure. The IRS living standard amounts usually are often lower than what you actually spend. The homestead exemption refers to the fact the new law has placed greater restrictions on which state exemption you can use as determined by your length of residence. A bankruptcy attorney will carefully determine the status of your homestead exemption during the filing process.
Another addition to the new bankruptcy law is the requirement that debtors take a money management course and get 90 minutes of credit counseling. This process has been streamlined in that there are many ways to fulfill these requirements online.
One of the major changes in the new bankruptcy law is the establishment of an income means test. The means test is how the courts will determine if you should be allowed to file a chapter 7. Under the means test, your income will be compared to the state median income in the state in which you live. Then your income will also be used in a formula that will determine if you can pay at least 25% of your net income to pay off unsecured debt. If you can, and your income is over the median, then the court will probably make you file a chapter 13 unless you can prove you have unusual circumstances.
This is just a quick snapshot of the new bankruptcy law changes effective October 2005. Of course, there are many other complex aspects to the law that only an attorney is qualified to interpret. Though the new law is more stringent than the old, it still gives millions of people a fresh start.
Bankruptcy Software News
Houghton Mifflin Harcourt files for bankruptcy
Houghton Mifflin Harcourt Publishers has filed for Chapter 11 bankruptcy protection in the US after agreeing with creditors to eliminate $3.1 billion of debt.
Read more...VIDEO: Bankruptcy fears in Greek town
As the likelihood of Greece leaving the euro grows, the BBC's Tim Whewell reports from the small Greek town of Lavrion to find out what life is like when the money runs out.
Read more...The Circuit: LightSquared vows to push ahead; software piracy; medical devices
LightSquared: LightSquared said that it will continue to win approval for its satellite network even after filing for bankruptcy Monday, The Washington Post reported . But analysts have said that it will be a difficult road for the company to move ahead as long as concerns persist about the network’s interference with global-positioning satellites. Read full article >>
Read more...LightSquared declares bankruptcy after GPS worries sank its mobile dream
IDG News Service - LightSquared, the startup that planned a nationwide wholesale mobile network only to be shot down by regulators because of GPS interference concerns, is declaring bankruptcy.
Read more...Cable Show 2012: Entropic Powers Comcast's HD Skype Service
Boston — Entropic Communications is touting that it supplied the system-on-a-chip used in Technicolor's adapter for Comcast's Skye on Xfinity high-definition TV videoconferencing service, and also that it is integrating its silicon and software with Comcast Reference Design Kit for IP-based gateway devices.
Read more...