Friday, November 18, 2016

How Often Are The Bankruptcy Laws Changed?

It should come as no surprise, especially during an election year, that the laws we have today may not be the same laws we have tomorrow. Amendments, revisions, and even repealing a law on the books happen all the time. Or, at least an effort to make these changes happens. It is much more common for a law to be changed at a state or local level than at the federal level, but federal laws can also be amended. One of the biggest changes in recent years to a federal law was to the Bankruptcy Code.

In 2005 Congress decided to rewrite some of the most important provisions of the Bankruptcy Code, and the changes were not widely received as good changes. Some of the most talked about changes we saw to the bankruptcy laws were:

         Implementation of the means test, which is a mathematical computation that is performed when a person files a case. The result will dictate whether a Chapter 7 or a Chapter 13 case is required. Most people saw this change as a negative, because the end result was that more people were made to file a Chapter 13 instead of a Chapter 7. The reasons this is not desirable is because a Chapter 7 is a total liquidation of debt, including credit cards, and lasts about 6 months. But a Chapter 13 case lasts us to five years, and during that time the debtor will have to repay at least a part of their credit card and other unsecured debt.
         If you are only eligible for a Chapter 13 case and want to keep your car, you cannot pay the value of the car vs. what is due if the purchase was recent. Well, not necessarily even recent. A provision was added that required Chapter 13 debtors to pay full price for their cars if bought within about 900 days of filing bankruptcy. This was not previously the law, and the change means not as many people get the benefit of paying their car’s value instead of what is owed. And, we all know that most cars are worth far less than what the loan balance shows.
         The requirement that you undergo credit counseling as part of your case was also added in 2005.
Even though 2005 was over a decade ago, these changes are still relatively new. In the days after the new law was in place, there was a lot of confusion over some of the new provisions. It is our job to stay on top of these changes, and make sure your case is filed properly. We are always looking at the trends in the law, and going to continuing education courses to make sure our representation of you is exact. If you have questions about bankruptcy, call us today.

If you have more questions about bankruptcy, contact us today at We will help you get prepared for what comes after we file your case, and have multiple locations where we schedule appointments.

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