New Bush Bankruptcy Law: Info on some of the changes

[Zorra]

President signs bankruptcy bill
What you should know about a new law that will make it tougher for consumers to clear their debts.
April 20, 2005: 3:24 PM EDT
By Jeanne Sahadi, CNN/Money senior writer
snip----
Under the new law, your income will be subject to a two-part means test. First, it will be subject to a formula that exempts certain expenses (rent, food, etc.) to determine whether you can afford to pay 25 percent of your "nonpriority unsecured debt" such as your credit card bills. Second, your income would be compared to your state's median income.

You won't be allowed to file for Chapter 7 if your income is above your state's median and you can afford to pay 25 percent of your unsecured debt, said California-based bankruptcy attorney Stephen Elias, who is coauthor of the book "How to File for Chapter 7 Bankruptcy." But, he said, you may be allowed to file for Chapter 13.

If your income is below the state's median but you can pay 25 percent of your unsecured debt, you may be able to file Chapter 7, but the court can still require you to file Chapter 13 instead if it believes that you would be abusing the system by filing for Chapter 7, Elias said.

Under current law, the court has great latitude in deciding whether debtors may file for bankruptcy in consideration of their personal circumstances. Under the new law, there will be few if any exceptions made to the means test, no matter how sympathetic your case, said Leon Bayer, a bankruptcy attorney in Los Angeles.

http://money.cnn.com/2005/04/20/pf/bankruptcy_bill/index.htm

[Lars39]

1. Thanks for posting this.

I didn't realize the new homestead exemption rules go into effect immediately. :(