Deciphering the Bankruptcy Laws

: Reese Baker & Associates

  Filed under: bankruptcy

The bankruptcy laws had several significant changes in 2005 with the Bankruptcy Abuse and Prevention Act. The new rules were heavily slanted towards the benefit of major creditors like credit cards companies. While they didn’t get everything they wanted, they did make it more challenging to qualify for bankruptcy. The new rules also made it more expensive to file bankruptcy, often hurting the people that are in a dire financial state. With your bankruptcy attorneys help you can navigate these laws and get the most benefit from filing bankruptcy.

Means Testing

If your income is more than your states median income, you may be considered a high-income earner and not be allowed to file for Chapter 7 elimination bankruptcy. Chapter 7 bankruptcy discharges your qualifying debt in as little as three to six months. Usually discharged is unsecured debt such as credit cards, personal loans, payday loans, and medical bills.

The law allows for a higher cost of living areas and family size. Allowances are also made for the county and the metropolitan regions. Your attorney can help you navigate these numbers to see if you qualify.

More Paperwork

Attorneys must now verify the accuracy of the means-testing for filers. This means more paperwork for the filer and the attorney. And since the law requires more work for the bankruptcy attorney, it raised the cost of attorney fees.


People use to be able to move to a state with more generous exemption laws and take advantage of the rules. Now you must live in a state for at least two years before you can file for bankruptcy in that state. To take advantage of the state’s homestead exemption, you must live in that state for three and 1/3 years.

Talking to a Rio Grande bankruptcy attorney can answer any questions you have about your circumstances and how you can get a fresh financial start.