What’s New

The New Bankruptcy Act

What’s New

The Good News

The good news is that bankruptcy, whether Chapter 7 or Chapter 13, is still the easiest and least expensive and most effective remedy for too much debt.
The state legislature increased the amount of bankruptcy exemptions on June 20, 2005.
85% of all Americans who wish to file Chapter 7 still can.
Chapter 13 is a more attractive option now.
Persons passing the means test are eligible for 36 month plans.
Persons passing the means test may be eligible for repayment of 0-10% of unsecured debts and secured debt.

Counseling

Before you can file bankruptcy you must have a certificate stating that you have completed credit counseling from a company approved by the U.S. Trustee. This is referred to as “in counseling”
We will arrange “in counseling” for you over the internet. We will walk you through this process.
To complete your bankruptcy you must do credit education called “out counseling”. We will arrange out counseling over the internet. We will walk you through this process.

Means Test

To be eligible for a Chapter 7 Bankruptcy (in which you discharge or get rid of unsecured debts), you must meet a “means test”. We determine this for you.
Studies show that about 85% of persons filing bankruptcy will qualify for Chapter 7. If you fail the means test, you can do a Chapter 13 repayment plan in which you pay secured debt to the extent of the nature of the security and a percentage (70% or less) of unsecured debt.
Chapter 13 stops interest on unsecured debt. This is particularly important on credit card debt.
In Chapter 13 the interest rate on secured debt can be reduced to prime plus 1% to 3%. Except debt for purchase money security in an auto within 910 days or purchase money security interest in other property within one year.

Time Limitations

The time between filing Chapter 7 has been increased to 8 years between filing dates.
Time between discharges.
Even if you are not time eligible to obtain a discharge under Chapter 13. We could file a 100% Chapter 13 plan and pay all creditors in full in order to prevent the sale of your home or other important property.

Income and Tax Refunds

In determining income for means test exclude income from Social Security and income tax refunds. Include bonuses as income.
The Chapter 13 Trustee no longer wants tax refunds.
The Trustee’s payment rate is 3.5% of funds received.