Bankruptcy law change is a common practice that comes into effect from time to time. The following bankruptcy information may prove valuable for you, as it will help you understand regarding the latest law changes regarding filing bankruptcy.
What Is The New Bankruptcy Law Change All About?
The latest bankruptcy law change is the addition of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 to the bankruptcy court of the United States.
When Did The Last Bankruptcy Law Change Come Into Effect?
The last bankruptcy law change in the United States bankruptcy code came completely into effect on October 17, 2005. However, the new bankruptcy laws in this regard was passed by Congress and signed into law by President Bush in April 2005. Some of the changes came into effect immediately, but it took one hundred and eighty days for the new bankruptcy law changes to come completely into effect.
What Is Bankruptcy Abuse Prevention And Consumer Protection Act Of 2005?
As per the new bankruptcy law change, now those who want to file for chapter 7 bankruptcy will have to pass a means test. The purpose of this means test is to assess whether your current monthly income is above the median income in your state. If your current monthly income is less than the median income of your state, you can qualify to apply for the chapter 7 bankruptcy. On the other hand, if the income is above the median income of your state and you are able to pay off your debts to the extent of at least hundred dollars a month, you will not be able to file for chapter 7 bankruptcy. In that case, your bankruptcy case will proceed under Chapter 13.
Is It Important To Show Federal Tax Returns To File For Chapter 7 Bankruptcy?
Since the time the new bankruptcy law change has come into effect, it is not essential for people applying for chapter 7 bankruptcy to show the federal tax returns from the last tax year. Therefore, if you have not paid taxes for the last year or for the last few years, you will have to pay the taxes first in order to be eligible for the chapter 7 bankruptcy.
Credit Counseling Is Also A Must
As per the new bankruptcy law change, now it has become mandatory for you to go through some sort of credit counseling on your own expense. It is also important for you to understand that the credit counseling you go through must be a government-approved program. It is better if you have also participated in a government-approved financial management education program. This will help you qualify for filing chapter 7 bankruptcy easily.