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On October 17, 2005, new bankruptcy law went into effect, changing the process of filing for bankruptcy throughout the United States. This new shift in law requires additional steps to be taken by the attorney and the debtor but has been geared toward benefiting the debtor. The following details explain the changes in the law and how they will affect anyone considering bankruptcy.




Documentation


The documentation required for filing for bankruptcy has been increased, asking the debtor to provide additional information thoroughly detailing all of their income and expenses. If expenses exceed the IRS allowance, a ‘special circumstances’ document must be submitted explaining the reasons for the extra expenses. A statement of accuracy must also be submitted with the special circumstances document. The additional documentation makes the task of filing take more time but provides more accuracy to a debtor’s financial dilemma. This could result in more debt relief.




Counseling


In an attempt to decrease the number of people filing for bankruptcy, the new law requires that debtors receive counseling from an approved credit counseling agency within six months prior to filing for bankruptcy. The purpose of the counseling is to ensure that people are not making an uninformed decision to file for bankruptcy. It is also the hope of the court that counseling will provide alternative options for those who truly don’t need to file.




The Means Test


Before the new law, consultations with an attorney would allow the client to choose what type of bankruptcy they felt suited them best. However, the new law is framed to reduce the number of Chapter 7 filings by only allowing people who fall under their median state income, adjusted for family size and inflation, and people who meet rigorous standards under the means test to file for it. The rest of the people who don’t meet these standards must be evaluated by a series of complex Jordy Nelson Elite Jersey , mathematical formulas that change annually to match new median incomes and expense standards. Clients who do not qualify through the means test will be required to file for Chapter 13 bankruptcy. The new law also extended the Chapter 13 term from a three- to five-year term, to a mandatory five-year term. Throughout the mandatory five-year term, the client must be supervised and represented before they can receive their discharge.




The effects of the new law make the process of filing for bankruptcy more complex, requiring attorneys to specialize in bankruptcy law. To completely understand how the new bankruptcy laws in your state can impact you