Washington, DC Bankruptcy Lawyers
Consumer bankruptcy representation for the District of Columbia, Northern Virginia, and Central Maryland
On October 17, 2005, sweeping changes in federal bankruptcy law went into effect. The bankruptcy attorneys at Ammerman & Goldberg provide effective representation to people seeking debt relief under the new bankruptcy law. If you have questions regarding new bankruptcy rules, call our Washington area bankruptcy attorneys.
CHECKLIST OF KEY CHANGES
The following is a more detailed summary of the key changes regarding the new bankruptcy law.
* Mandatory Credit Counseling
Before filing for bankruptcy most applicants must undergo credit counseling in a government-approved program.
* Stricter Eligibility for Chapter 7 Filing
Bankruptcy applicants who wish to file under Chapter 7 must meet certain eligibility requirements under a "means test". Under the "means test," if your current monthly income is less than the median income in your state, you can file for bankruptcy under Chapter 7. But, if your current monthly income is above the median income in your state, and you can afford to pay $100 per month toward paying off your debt, you cannot file under Chapter 7 and must proceed under Chapter 13. Whether you can afford to pay $100 per month (or $6,000 over a five-year period) is based on a formula that includes your monthly income, your expenses, and the total amount of your debt.
* Tax Returns and Proof of Income Required
Under the new bankruptcy law, people wishing to file bankruptcy under Chapter 7 or Chapter 13 must show proof of their income by providing federal tax returns from the last tax year. If a bankruptcy filer has not paid taxes for the previous tax year, he or she must do so before the bankruptcy can proceed.
* More Filings under Chapter 13
As discussed above, if a bankruptcy applicant is ineligible for filing under Chapter 7 based on the "means test," he or she must file under Chapter 13 instead. There are a number of major differences between Chapter 7 and Chapter 13 bankruptcy, but the main distinction is that under Chapter 13, the debtor enters into a five-year repayment plan in which he or she must pay a certain amount of money to creditors, based on a strict expenses-to-income formula.
* Fewer "Automatic Stay" Protections for Filers
Under the prior Bankruptcy Code, people who filed for bankruptcy were entitled to certain immediate protections from creditors and others-including most debt collection and lawsuit actions. These protections are part of what is called the "automatic stay" effect of a bankruptcy filing, because many potential legal actions against the filer are stopped (known as "stayed" in legal terms). But, under the new bankruptcy law some of protections have been eliminated. For example, filing for bankruptcy no longer delays or stops eviction actions, driver's license suspensions, legal actions for child support, or divorce proceedings.
* New Priority for Unpaid Child Support and Alimony
Bankruptcy laws provide a system of repayment priority for people and companies that are owed money (called "creditors"). Under the new bankruptcy law, among the changes in creditor priority is that people who are owed unpaid child support and alimony (i.e. the bankruptcy filer's family members) will take priority over any other creditor.
* Mandatory Financial Management Education
After the conclusion of bankruptcy proceedings, but before any debt can be discharged, bankruptcy debtors must participate in a government-approved financial management education program. The procedure and certified programs for financial management education are being established by the U.S. Trustee's Office, a component of the US. Department of Justice, which is responsible for overseeing the administration of bankruptcy cases.
If you need legal advice from a debt relief law firm, call Ammerman & Goldberg.
Contact a Washington, DC, area bankruptcy law firm.
