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GRAND RAPIDS MICHIGAN BANKRUPTCY LAWYERS2005 Bankruptcy Reform ActIn 2005, The United States Congress passed the Bankruptcy Reform and Prevention Act. The bankruptcy law changes, in great part, were written by the credit card companies. The purpose of the changes is to make it more difficult for a person to file bankruptcy. However, contrary to the media description of the changes, only about fourteen percent (14 %) of the cases should see any major change in filing requirements. One of the biggest changes in the 2005 reform is the requirement of a pre-filing bankruptcy briefing. This requires a consultation with a credit counseling agency prior to filing for bankruptcy (no mare than 180 days prior to filing). This consultation can be done over the phone or on a computer with Internet access. The cost for this consultation is about fifty dollars (50.00). Also, prior to receiving a discharge, a person must attend a personal financial management course. This can also be done by Internet access or a classroom setting. Our office prefers Greenpath, but there are other services. The Bankruptcy Reform Act of 2005 introduced means testing. The purpose of this change was to force high income individuals into chapter 13 bankruptcy rather than filing for chapter 7 bankruptcy. A chapter 7 bankruptcy eliminates your unsecured debt (with some exceptions). Debts such as credit cards and medical bills are discharged and do not receive any repayment. There are exceptions to this discharge. These are debts such as taxes, student loans, child support, and other specific unique debt. To qualify for a chapter 7 discharge, your income must be either below the median income for the county you reside or below the median income after deductions for certain expenses. For example, for 2007, the median income for some counties in
If you do not qualify for chapter 7 bankruptcy, than you may qualify for chapter 13 bankruptcy relief. Unlike a chapter 7 bankruptcy, in a chapter 13 bankruptcy, you pay back your creditors based on your ability to pay (not how much you owe) over a 36 to 60 month plan. It is important to realized that the creditor may only receive a small amount of the total debt owed to them or they may receive the full amount depending on the persons ability to pay (not how much is owed in total debt). A chapter 13 bankruptcy is for someone who cannot qualify for a chapter 7, but is unable to pay their debt on their own. This article is meant to be used a brief explanation of bankruptcy and the changes in the bankruptcy laws. For specific information related to your facts and circumstances, you should consult with an attorney from our office. Krupp Law Offices P.C. represents clients facing bankruptcy throughout West Michigan, including the cities of Our office can help. KRUPP LAW OFFICES PC 161 616-459-6636 or
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* These numbers are changed annually. |