|
Implementing the new bankruptcy law changes caused average filings to
jump sharply during the months before the effective date. Most of the
cases filed during this anticipatory period were filed by individuals
who would soon be excluded from Chapter 7 cases by new qualification
testing requirements. In brief, the most notable new bankruptcy law changes
pertain to the following new restrictions:
- Means testing creates a three tiered approach to test for
qualification within Chapter 7 limitations, if earning above the state
median income. These tests are based on income, disposable income, and
total unsecured debts.
- All people earning below the state median income may continue
filing Chapter 7 without means testing.
- Additional means testing establishes a cut off point for
permissible 3 year Chapter 13 plans, while all others must file 5 year
plans if paying less than 100% of all debts owed.
- All debtors must now attend classes provided by approved
counselors who train debtors in budget management and alternatives to
filing bankruptcy.
The effect of bankruptcy law changes?
The lower half of income earners, and unemployed persons will be
inconvenienced by the new bankruptcy Law changes, yet the complete
elimination of all debts (pursuant to discharge restrictions) is still
permitted. For anyone owing above the state median income level, Chapter
13 plans are required except in cases involving catastrophic debts.
Overall, the much anticipated bankruptcy law changes are not expected to
change filing habits of the general U.S. population by a statistically
significant amount.
|
