Bankruptcy (continues...)

It is now harder to file bankruptcy

Recently there has been an effort by bankruptcy judges to be harder on people who are going bankrupt since in the recent past there have been many abuses of the bankruptcy system. It is also important to know that if you believe you are going to go bankrupt you should NOT go and max out all of your credit cards right before you do so. The court will see this as an abuse and may not allow you to include those debts in your bankruptcy.

New Bankruptcy Law

A new bankruptcy law went into affect in October 2005 that makes it more difficult to wipe out all of your debt by filing bankruptcy. In order to file bankruptcy, you must go for credit counseling and budget analysis in the 180 days before filing bankruptcy.

Qualifying for Chapter 7 bankruptcy

To qualify for Chapter 7 bankruptcy your income must be below the median income in your state for a family of your size or you have to pass a means test. The means test for bankruptcy is that if you can pay $6000 over five years of $100 a month towards your debt, you must file Chapter 13 only. You have to pay the full amount of your car loan regardless of the condition of the car. Filing fees for Chapter 7 have increased, but fees for Chapter 13 have decreased.