The Purpose Of Adding New Bankruptcy Laws

There is always a specific purpose of addition of new bankruptcy laws. The main objective is to protect both debtors and creditors from any possible fraud that may be caused because of some loopholes in the existing law. Because of the wordings that are used in the bankruptcy laws, some people try to take undue advantage of the same. Whenever new laws are made, the main purpose is to make those wordings more clear in order to leave no room for any kind of bankruptcy fraud.

How Frequently The New Bankruptcy Laws Are Added

If it is about how frequently the proposals for bankruptcy laws are sent to the committee, it is very frequent – may be a dozen times every year. But, if it is about how frequently they are voted on by the full congress, it is rare. Most of the proposals for new laws for bankruptcy die much before they could be voted on. However, very recently, some new bankruptcy laws have been added to the bankruptcy court and these new laws have made the creditors’ side stronger in order to protect them from any possible bankruptcy frauds.

How To Get Accurate Information Regarding The New Bankruptcy Laws

The bankruptcy laws are very complex and whenever new bankruptcy laws are added to the bankruptcy code, it makes it even more complex. Because of this, it may not be an easy cake for a common man to understand the new laws. This is where the need of an efficient and experienced bankruptcy lawyer arises. If you want to understand the new bankruptcy laws and get the accurate information regarding the same, only your bankruptcy attorney can help you.

Overall, if the debtor is in genuine need of bankruptcy protection, they need not worry about the effects of new bankruptcy laws. The new laws are added to make the system more transparent. In order to make things smoother for you, you are advised to contact your bankruptcy Attorney before you go ahead and file a court petition for bankruptcy. Your attorney is the only person who can help you get the best solution for your specific financial case. They may help you get out of the problem without filing bankruptcy or they may tell you which type of bankruptcy is best for you, keeping in view the new bankruptcy laws.

Purpose Of Filing Bankruptcy

There are basically two main purposes to claim bankruptcy.

•If the debtor is declared as bankrupt by the bankruptcy court, they get the opportunity to rebuild their dilapidated financial life, as bankruptcy relieves them of most of the debts. A bankrupt individual or organization is not legally obliged to pay most of the debts he/she owes.
•If certain debts have been excluded from the bankruptcy discharge, the debtors are responsible to pay the debts on priority basis but only to the extent of the available means with them. The available means are the non-exempt assets submitted by the debtor to the bankruptcy court.

Types Of Bankruptcy

There are basically two types of bankruptcy – Liquidation Bankruptcy and Rehabilitation or Reorganization Bankruptcy. In liquidation bankruptcy, the assets of the debtors are seized and sold off to pay the debts they owe to their creditors. On the other hand, reorganization bankruptcy allows the debtors to carry on with their venture and pay the debts in monthly installments. Here, you must note that the debtor is not supposed to pay the entire amount. All they have to pay is the reduced claims made by the creditors. Depending upon your specific situation, you can choose the type of bankruptcy services for you. Your bankruptcy attorney will help you reach a wise decision in this regard.

Legally Imposed “Stay”: Protection Of The Debtor

When a bankruptcy petition is filed either by the debtor or the creditors in the bankruptcy court, the creditors cannot take any non-bankruptcy legal action against the debtor because of the legally imposed “Stay” during the time while the bankruptcy case is pending, awaiting judgment. The non-bankruptcy legal actions may include forcing the debtor to make payments of the debts they owe, pursuing lawsuits, garnishing wages etc.

Bankruptcy Fraud

Bankruptcy fraud is an attempt to manipulate with the financial facts by the debtors in an effort to save them from paying off the debts they owe. Such manipulation of facts may include concealment while declaring the available means and assets, destroying or concealing some relevant documents, false declarations in the United States Bankruptcy Court etc.

Bankruptcy Laws

As per the bankruptcy laws in the United States, six types of bankruptcy have been mentioned under six chapters.

•Chapter 7 Bankruptcy – Personal bankruptcy for both individuals and businesses
•Chapter 9 – municipal bankruptcy
•Chapter 11 Bankruptcy – rehabilitation or reorganization bankruptcy
•Chapter 12 Bankruptcy – reorganization bankruptcy for family farmers and fishermen
•Chapter 13 Bankruptcy – rehabilitation or reorganization bankruptcy for people who have a regular source of income. Sometimes also termed as Corporate bankruptcy
•Chapter 15 Bankruptcy – international bankruptcy cases

The Role Of Bankruptcy Lawyers

Because of the complexity involved in the bankruptcy laws, the importance of hiring a bankruptcy attorney to bring bankruptcy help for you cannot be ignored. The bankruptcy lawyers are the people who are well aware of all the ins and outs of the various bankruptcy situations and the various steps in filing bankruptcy. Again, new bankruptcy laws also get included from time to time, which is very difficult for a common man to be aware of. Only an efficient and experienced bankruptcy attorney can help you in this regard.

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.

How To Defend Your Claims In The Bankruptcy Court

Bankruptcy courts do not take decisions on emotions. They look for facts and figures and various records. The better you can defend your claims based on those records, the better judgment is likely to be given by the bankruptcy court. However, because of the lots of intricacies involved in the various bankruptcy laws, it will be a very difficult thing for a common person to defend his or her claims based on those laws. The difficulty level is further increased, keeping in view the very fact that new bankruptcy laws are also added to the bankruptcy code from time to time, making the same even more difficult to understand. Therefore, it is always recommended for the debtors that if they want to defend their bankruptcy claims in the bankruptcy court successfully, they must avail the valuable services of knowledgeable and experienced bankruptcy lawyers.

A bankruptcy attorney is the person who understands the ins and outs of the all the bankruptcy laws. They will study your specific case based on the facts and records presented by you and then will suggest you the best bankruptcy solution as per the law. Because of their experience, they know how to convince the bankruptcy court to give judgment in your favor.

The Reasons Why People Lose Their Claims In The Bankruptcy Court

When a debtor files for bankruptcy and is denied by the bankruptcy court, the court must not be held responsible for the same. The only reasons why people are denied bankruptcy include concealment of certain facts and records, intentional manipulation with the truth, and many other reasons that can be put easily under bankruptcy fraud. Another reason why debtors lose their claims is that they try to defend their claims themselves and do not hire a bankruptcy attorney to help them with the process. Therefore, for genuine people who really deserve bankruptcy coverage, it is highly advised to always take help of an efficient bankruptcy attorney. Bankruptcy lawyers are the persons who are well versed with the court system and they have the capability to help you out of the debt stress even when things seem out of control and impossible.

Bankruptcy court usually refers to the specific federal district court that handles only bankruptcy cases. The court will see your documents and ask certain relevant questions in an effort to verify the truth. Depending upon your specify case, you may be asked to come again after a few days to further scrutiny or they may ask you to come at a certain date for the final judgment.

Types Of Bankruptcy Laws Taken From The Bankruptcy Code

As per the bankruptcy code, at present, there are four main types of bankruptcy laws. These bankruptcy laws are popularly known as chapters. The four main chapters in the bankruptcy code include chapter 7 bankruptcy, chapter 11 bankruptcy, chapter 12 bankruptcy an chapter 13 bankruptcy.

How Does The Bankruptcy Code Help Persons In Deep Debt Troubles

The various bankruptcy laws in the bankruptcy code have been designed in a way to protect people with bad financial position and deep debt troubles from unreasonable hassles that might be forced by the creditors. For example, when a debtor files for any type of bankruptcy, a bankruptcy stay is imposed by the bankruptcy court. This bankruptcy stay protects the debtor from the undue activities from the creditors. For example, the creditors cannot force the debtor to make the payment while the proceedings for the bankruptcy are running in the court. Any such activity from the creditors will be treated as illegal and the debtor can take action against them. However, the purpose of the bankruptcy code is not to protect only the debtors. The bankruptcy code has been carefully designed in order to stop debtors from doing any kind of bankruptcy fraud. New bankruptcy laws are added to the bankruptcy code from time to time in order to fill the loopholes that might be used by the debtors to perform some kind of bankruptcy frauds.

Is The Bankruptcy Code Same In All The States?

The bankruptcy code varies from state to state. Therefore, it is important for a debtor to make sure that the bankruptcy attorney they are hiring is completely aware of the specific bankruptcy code of the state. However, it does not mean that the states have the power to change the bankruptcy code. The basic bankruptcy rules are the same in all the states. What makes the real difference is the way the various bankruptcy laws are interpreted in every state.

If there is a change in the bankruptcy code, the change will come into effect in all the states.