Today you will find in the USA that there have been some major changes made in respect to the country's bankruptcy law. Therefore for all Americans today it is important that they know exactly what these changes are and what effect they may have on them should they need to file for bankruptcy at any point in the future. Below we will take a look at what changes have been made with regard to filing for bankruptcy.
But first, we are going to take a look at the types of bankruptcy that one is able to file for in America at present. Chapter 7 - This is more commonly known as "straight bankruptcy" or "liquidation" and in which a trustee will be appointed to oversee the bankrupt's property. Some of the assets that you own will, in some cases, need to be surrendered to the trustee and which they will then sell in order to pay off your creditors.
Also through this form of bankruptcy filing, most (but not all) of the debts which you will 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 - Through a Chapter 13 a person will come up with a proposed repayment plan to pay back all their creditors.
The court will then appoint a trustee just as they do with a Chapter 7 and it is this person who will collect the payments from the person who has filed a Chapter 13 and then pay these to the creditors. The main role of the trustee appointed to a Chapter 13 bankruptcy filing is to ensure that the person complies with the repayment plan that has been put in place at all times. Note that in this case, your debts are not wiped out.
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. So what this actually means is that in the future if you find that your income is higher than the median for your state after a means test is carried out, you will probably not be able to file Chapter 7. You will need to file for a Chapter 13 rather than a Chapter 7.
As well as the income limit restriction, anyone who wishes to file for Chapter 7 will actually have to undergo credit counseling before they can actually file their case with the court. Also as part of the new bankruptcy law, a person will need to also undergo additional counseling relating to learning how to control their budget and also the right way of managing the debts that they have. It is only after a person has participated in such counseling then the decision to whether the debts will be cancelled or not is made.
For more insights and additional information about Bankruptcy Law as well as getting a free no-obligation bankruptcy evaluation from a bankruptcy attorney local to you, please visit our web site at http://www.bankruptcy-data.com