If you think that you have nothing now, the new bankruptcy laws could even shrink that! The new bankruptcy law overhauls the laws that were modified in 1978. It not only tightens the requirements for those who want to file for bankruptcy but for their attorneys as well.
These are several of the major changes that were initiated under the new bankruptcy law:
"Means Test" - You now have to show that you are not abusing the use of bankruptcy. This test calculates what you make per month minus certain expenses that are allowed. The "median income" will vary from state to state. If you fail the "means test', then you must file for Chapter 13 bankruptcy. Expense allowances - Guidelines are put forth by the IRS for allowable expenses, and they are stingy. The food allowance is approximately $200 a month, and the housing allowance is approximate $800 a month. Residency requirements - There are state and federal bankruptcy laws, and some state laws are more lenient than others. Texas and Florida have very generous "homestead allowances". The new bankruptcy law discourages you to look around for the best deal. You are not permitted to file for bankruptcy in a more favorable state unless you have resided there for a minimum of two years. Mandatory credit counseling - Another change that came with the new bankruptcy law is that you have to take a credit counseling course that has been approved within 180 days of filing for bankruptcy. Sorry to say, this is not a free course. The cost of this course is approximately $75.00. More paperwork - In order to prove that bankruptcy is necessary, the consumer will have to present much more documentation. Such things a debtor must provide are: a list of all unsecured and secured creditors, proof of taking the credit counseling course, a detailed list of one's expenses and monthly income, liabilities and assets, the most recent tax return, photo ID and pay stubs. Hefty legal fees - A bankruptcy attorney must now "certify" that their client's figures are accurate. If they prove not to be, the lawyer as well as the client may face sanctions. This means that your attorney must do more investigating and fact-checking to make sure your information as well as his certification is above-board.
Is it best to have a bankruptcy attorney when and if it comes time to file for bankruptcy? There is certainly no legal requirement stating that you have to retain a lawyer. However, you would be very foolish not to do so. If you choose to file on your own, and forget to file certain documents, your case can be subject to dismissal and you will need to start again from the very beginning. As an example, a couple recently tried to file for bankruptcy online. They were not exactly sure if we should have filed jointly or just the husband. They were doing it on their own and really goofed things up and now they are paying for it! Please do not do this in an attempt to save some money because it will only come back to haunt you in the end. It is in your best interest to have an experienced bankruptcy attorney working for you.
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