Understanding The New Bankruptcy Law
The legislative histories of the various proposed reform acts have a
decidedly twisted past. Competing special interests groups contributed
massive financial support to Congressmen and Senators each year since
the early 1990's. Of course, few people agreed upon
the most effective means of protecting both creditors and debtors, or
even who the law should favor. In
the end, most amendments were adopted from proposals drafted by large
commercial lenders and financial institutions that were represented by
special interest groups, lobbyists, and political action committees.
- Federal preemption of homestead exemption values became effective
on April 20, 2005, when S. 256 was signed by the President.
- The remaining terms of Bankruptcy Abuse Prevention and Consumer
Protection Act of 2005 became effective 180 days later, according to
the enabling clause contained within the act, on October 17, 2005.
In general, any person who earns less than the annual median income
for the state in which they reside presumably may still file Chapter 7
bankruptcy. Anyone earning above this amount must satisfy two addition
tests as a condition of maintaining a Chapter 7 case. These new rules
are collectively known as "means testing."
For more information about means testing and other the new laws for bankruptcy under Chapter
7 and Chapter 13:
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