Understanding Bankruptcy Laws Before Filing

The decision to file for bankruptcy is a hard one and so is the process. The original bankruptcy laws of 1978 have been revamped tightening requirements for those seeking bankruptcy relief. Before filing, educate yourself on the latest bankruptcy requirements and seek out the help of an experienced bankruptcy attorney to steer you through the process.Changes Made to Bankruptcy LawsThe landscape of filing for bankruptcy has been changed dramatically with the implementation of the new bankruptcy laws.One change made is there is now what is called a “means test”, which is used to as a tool to insure that you are not abusing the bankruptcy system. With this test, your monthly income is ascertained, minus certain allowable expenses. If the outcome is above the “median income” then you will be required to file Chapter 13 bankruptcy.With the second change made, the Internal Revenue Service (IRS) set up strict guidelines for what they call “allowable expenses.” These allowable expenses require some tight budgeting, which include $200 a month for food and $800 a month for housing.Thirdly, before filing it is important to educate yourself on the bankruptcy laws of your particular state. Some states’ requirements are stricter than others. You must be a resident of a state for at least two years before you can file within that state.The fourth change to the bankruptcy laws is you must attend a mandatory credit-counseling course that is approved by the IRS within 180 days of your filing for bankruptcy. You will have to pay approximately $75 for this course.The fifth change made is more paperwork is required to prove that bankruptcy is necessary for you. Some of the requirements by the IRS include: a list of unsecured and secured creditors, proof that you have taken the credit counseling course, detailed list of your expenses and monthly income, liabilities and assets, most recent tax return, photo ID and pay stubs.Lastly and probably one of the least desirable changes is that you will now be paying higher legal fees for your bankruptcy filing. You are required to have a bankruptcy attorney certify that your figures are accurate. This requires the attorney to do a very through investigation of your filing to insure that the information is correct. Otherwise, both you and your attorney may face sanctions for any errors.Get Help from an AttorneyUnder the new bankruptcy laws you are not required to retain an attorney other than to certify and fact check your filing. However, it is a good idea to seek the help of a bankruptcy attorney from the start to ease you through the process. They can advise you on the steps to take and paperwork that needs to be filed. If you go it alone, and forget to file certain documents, your case could be dismissed and you would have to start the process all over again. It might cost you some cash to retain an attorney, but in the long run it could save you many headaches.

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