Bankruptcy
Many individuals are swamped with debts that they cannot pay, and need to resort to bankruptcy. Bankruptcy filings can be caused by medical problems, job loss, divorce and separations, and/or a combination of unforseen events. Bankruptcy is often overwhelming, and creditor harassment and financial uncertainty create tremendous stress. However, Bankruptcy law and the Bankruptcy Court are designed to relieve the burden of financial problems.
New Bankruptcy Law
Over the past several years, Congress has been urged by banking and credit card industries to pass legislation that would hinder consumers from filing bankruptcy under Chapter 7, a type of bankruptcy which allows individuals who qualify to eliminate or discharge all of their unsecured debt (except for certain categories of debts, such as taxes, child support and student loans). On April 20, 2005 President Bush signed into law the Bankruptcy Abuse Prevention and Consumer Protection Act, which took effect on October 17, 2005.
Despite rumors to that effect, THE NEW LAW DOES NOT ELIMINATE CHAPTER 7, nor does it prevent individuals from getting rid of credit card debt. The truth is you can do almost everything under the new law that you could under the old law. Over 90% of individuals can get the exact same relief under the new law as they could under the old law.
So what has changed under the new law? The main difference is that there are additional paperwork requirements. You will need to document your income and expenses. In some cases, you will need to provide proof (such as pay records) of your income for the 6 months prior to filing. There is also a requirement that individuals filing bankruptcy undergo credit counseling both before and after they file. However, this can be done either over the phone or over the internet, so you will not have to leave you home to do it.
Another change under the new law is that there is now a mathematical formula to determine whether one qualifies for Chapter 7 or would need to file under Chapter 13. This is called the “Means Test”. In order to qualify for Chapter 7 under the Means Test, one must either have gross annual income that is below the state median income level or have income above the state median income level but have enough allowable expenses so that the remaining “Disposable Income” is insufficient to pay creditors at least $6,000.00 over 5 years. Over 90% of the individuals we have interviewed qualify for Chapter 7 under the Means Test. Contract our office today for a free Means Test analysis.
DOCUMENTS NEEDED FOR FILING BANKRUPTCY
1. All personal and business books, records of account, bank books, bank statements for the 6 months preceding bankruptcy (the last bank statement must show the amount on deposit on the date of bankruptcy);
2. All contracts or title papers pertaining to any property in which the debtor has an interest, including any deed or contract under which the debtor holds title to or any interest in real estate, all recorded mortgages, tax assessments, liens, or encumbrances upon said property, including the amount owed on date of filing. These documents may be obtained from the Office of the Clerk for the county in which the real estate is located;
3. Title papers to any motor vehicles, mobile homes, trailers or boats (if original papers have been lost, duplicates must be obtained from the Office of the Clerk for the county in which the vehicles are registered).
4. Certificates of stock, bonds and a disclosure of any safe deposit boxes & list of contents;
5. Contracts of life or burial insurance;
6. The debtor's 2 most recent state and federal income tax returns, including copies of all 1099 and W-2 forms;
7. Payment advices (wage statements) received within 60 days before filing from any employer (for those over the state median income, will need 6 months);
8. All notes, security agreements, loan disclosure statements and other documents relating to loan transactions to which the debtor is a party