Bankruptcy Reform

Do you know How Bankruptcy Reform Affects You?

Bankruptcy reform passed Congress and became law in 2005. These new bankruptcy laws have made it more difficult and more expensive for individuals to file for bankruptcy.

  • You have to have credit counseling within the 6 months prior to filing.
    When you decide to file for bankruptcy, you cannot do it immediately. Before filing, you have to meet with a nonprofit, government approved credit-counseling agency.
  • If you want to eliminate your debts, you will be subject to a means test that will determine whether you are allowed to file for Chapter 7.
    If your income is higher than the state average, you will have to take a means test. This will calculate your presumed income, debt, and certain deductions, and if you have more than a certain amount after the deductions, you cannot file for Chapter 7. The means test is meant to cut down on fraudulent bankruptcy claims, but unfortunately makes it impossible for courts to consider factors that are not included in the assumed deductions.
  • There are higher fees.
    The fee to file for bankruptcy has increased from $209 to $299.
  • The Justice Department allows means test exemptions for disaster victims.
    This is not officially part of the new bankruptcy law, but the courts are allowed to use their discretion and not enforce the means test for people who are filing for bankruptcy because they were victims of large-scale disasters.
  • Repayment for Chapter 13 has been extended.
    For people who make above the state's average income, the repayment plan for Chapter 13 bankruptcy is now 5 years. For people who make below the state's average income, the repayment plan can be 3 to 5 years.
  • You may not be protected from eviction when you file for bankruptcy.
    Filing for bankruptcy used to mean that you couldn't be evicted. With bankruptcy reform, you can still be evicted even if you are filing for bankruptcy if the eviction proceedings were begun before you filed. The automatic stay still applies if you file for bankruptcy before an eviction is attempted.
  • Your attorney is legally liable for the accuracy of the information you provide.
    Bankruptcy attorneys are now responsible for ensuring that you are not taking advantage of the system. In general, this translates to higher attorney fees because it takes substantially more work to investigate every claim you make.

Contact Clausell Law Firm, a Houston bankruptcy laws attorney today.