bankruptcy law - it is probably not what you assume

In the USA today there have been some dramatic changes made in relation to the Bankruptcy Law. It is important therefore that all should know what these changes are just in case one finds themselves in a situation where they are required to file for bankruptcy.

However, before we look at the major changes that have occurred we need to explain a little bit about the different kinds of bankruptcy one can now file for.

Chapter 7 - This is the most common type of bankruptcy that a person is going to file for and for which a trustee is appointed. It is this person's job to oversee the person who has filed for bankruptcy and find the property and assets which may well be sold off by the trustee to help pay the person's creditors. In most cases after filing Chapter 7, a person will find that most of the debts (although not all) which they have incurred, will be cancelled.

Chapter 11 - Often Chapter 11 is used by businesses who wish to file for bankruptcy, but on occasions, some individuals may choose to use this as well. But it is very rare because Chapter 11 is extremely costly to file for and also is very complex to deal with. Plus the only people who are likely to use this form of bankruptcy filing are those as individuals whose debts are above the limits set for a Chapter 13 filing (which we look at next). But for a business who files for Chapter 11 it, means that they are still able to operate as a going concern yet are sheltered from some of its debts as well.

Chapter 13 - This form of bankruptcy allows you to set up a proposed repayment plan that will help you with clearing all the debts you have. This will need to be approved by a court and a trustee will be appointed by the court to collect the necessary payments from you and then distribute them to your creditors. The trustee will ensure that at all times you comply with the repayment plan that has been put in place.

Above we have explained a little bit about the kinds of bankruptcy one is able to file for in the USA today. Now we are going to take a look at the changes that have taken place recently with regard to the bankruptcy law. The first one relates to the filing for a Chapter 7 bankruptcy. Today no longer can someone whose income is above the state's recommended median be able to file a Chapter 7.

Before a person is actually able to file for Chapter 7, they will first have to undergo a means test to see what their income actually is in relation to the state's median. If it is found that their income is higher than this, then they will instead have to file a Chapter 13.

Along with the limit being set at a particular level for Chapter 7 before you can actually file for bankruptcy you need to under go credit counseling beforehand. As part of the new bankruptcy law one also will need to participate in additional counseling in relation to controlling your budget and the best way to manage the debts that you currently have before they can be cancelled.

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For more insights and additional information about Bankruptcy Law as well as getting a free bankruptcy evaluation from a bankruptcy attorney local to you, please visit our web site at www.bankruptcy-data.com

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