Bankruptcy Laws Have Changed: What You Need to Know
Just as changing economic conditions have seen a rise in insolvency claims during the last few years, they've also seen significant changes to the laws that govern such filings. As these modifications have a direct impact on debtors, creditors, and individuals affected by legal disputes between the two, it's necessary to summarize some of the most important developments in bankruptcy law.
In 2005 the federal bankruptcy code was amended by the Bankruptcy Abuse Prevention and Consumer Protection Act. Among other things, these modifications to existing federal statutes limit individuals to one Chapter 7 Bankruptcy filing within an eight year span of time. They also mandate that each claim pass a so-called 'means test' to proceed in court. Should their claim fail the means test, however, a debtor may still seek relief under Chapter 13 Bankruptcy protection. In addition, any party that files a bankruptcy claim must also undergo credit counseling from a pre-approved agency before filing their bankruptcy petition.
Ultimately, however, the goal of all bankruptcy laws remains to protect individuals who are in unfortunate economic circumstances and, as is true with modern approaches to insolvency, rehabilitate their financial status. The basic safeguards afforded by Chapter 7 Bankruptcy still apply in that, if they cannot repay their debts, those making such a claim are entitled to certain exempt assets should their claims proceed. In other words, the option of claiming bankruptcy, and receiving its related legal protections, still exists for individuals who have fallen on hard times and cannot genuinely repay their creditors.
These and other changes to both federal and state laws, however, still have an impact on bankruptcy proceedings and related legal matters. It's for this reason that anyone who is thinking of filing for bankruptcy under any chapter should consult with attorneys who are well-versed in the new laws and their ramifications. This is made all the more necessary by the fact that many of the books concerning insolvency that have been produced for popular consumption were printed before the 2005 changes came into use. This means that they can dangerously out of date and capable of harming the future economic security of anyone who reads and acts on them without consulting experienced, qualified counsel like the professionals at our offices. As always, they're happy to answer any questions anyone might have on the 2005 changes to the bankruptcy laws or any questions about insolvency in general.