Se Habla Español 2005 Bankruptcy Reform Act
In October 2005, sweeping new bankruptcy laws took effect, making it harder for individuals to file for a Chapter 7 bankruptcy or Chapter 13 bankruptcy. More than ever, you will need an experienced personal bankruptcy lawyer to help you identify your options, including stopping garnishments and foreclosures. Here is just a sample of the changes in bankruptcy law from the 2005 bankruptcy reform.
For a FREE phone consultation to discuss your situation with a skilled Chicago, Illinois, bankruptcy attorney, please call (312) 338-1808.
The Means Test
Under the old bankruptcy code, Chapter 7 bankruptcy was available to anyone needing a fresh start. Under the new bankruptcy laws, you must now pass a “means test” to qualify for a Chapter 7. A means test is a complicated way of determining whether you have enough income, beyond what you need to survive, to pay off a portion of your debt.
Essentially, if you make enough money, you are not allowed to file for Chapter 7. If you earn more than the U.S. median income, you will probably not pass the means test, which means you may not be able to file a Chapter 7 bankruptcy. Instead, you will have to file for a Chapter 13 bankruptcy in which you are put on a very strict debt repayment plan.
Mandatory Credit Counseling
As of October 17, 2005, most people filing for bankruptcy must now obtain credit counseling from an approved credit counseling agency before filing for bankruptcy. (There are exceptions, for example, where there is an emergency and the person could not receive counseling within five days or where the U.S. trustee has determined that the approved agencies are not adequate to provide the required counseling).
Time Between Discharges
A Chapter 7 debtor cannot discharge debts if a prior discharge was received within eight years of the new filing. Under the old bankruptcy law, the debtor only had to wait 6 years before filing a new bankruptcy case.
Duration of Chapter 13 Repayment Plans
If the Chapter 13 debtor’s income is greater than the state median income, the plan proposed must be for five years. On the anniversary date of a confirmed plan, a debtor must file a new statement of income and expenses.
Tax Returns Mandatory
The debtor must provide a copy of his or her latest tax return or a transcript at least seven days before the meeting of creditors or the case “shall” be dismissed. The same tax information must also be provided to any creditor who requests it. All tax returns must be filed for a plan to be confirmed in Chapter 13. The debtor must file all returns from four years prior to the Chapter 13 filing.
We Can Help
The Law Office of O’Grady & Associates can help you through the maze of the current bankruptcy laws and find a solution that best suits your personal situation. We strongly advise you to seek bankruptcy advice as soon as possible to determine the best course of action for your particular circumstances.
Call (312) 338-1808 or fill out our intake form for a free initial phone consultation in which our bankruptcy attorney can work closely with you to find a solution to your financial problems.
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