New Bankruptcy Laws For Chapter 7 & 13

The new bankruptcy law substantially changes qualification requirements for Chapter 7 cases. Also, new bankruptcy code amendments incorporate changes in the method required to calculate disposable income for determination of Chapter 13 payments. The new bankruptcy rules, after reform, require all debtors follow a new national standard for calculation of disposable income.

Following a lengthy period of controversy, all Republicans in both the US Senate and House of Representatives block voted in favor of reform. President Bush signed the enrolled bill S.256 ER on April 20, 2005. The new bankruptcy law takes effect on October 17, 2005, however, the legislation passed provided several provisions, and most notably homestead value limitation caps, were effective almost immediately. Also, be aware, additional legislation pending could significantly change the new Act.

The new federal bankruptcy law for Chapter 11 business filings

The new bankrupt laws primarily target consumer cases filed under Chapter 7 and Chapter 13. The provisions of Chapter 11 were not affected dramatically, with most amendments pertaining to procedural changes clarification. In addition to business corporations and other entities, individuals may file Chapter 11 reorganization plans as in past editions of the Code.