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Bankruptcy Information and How the Laws Have Changed

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Bankruptcy laws changed in 2005, and many consumers are confused about what they can and cannot do when filing for bankruptcy. The laws made it more difficult, but not impossible, to discharge all of your debts in Chapter 7 Bankruptcy. Here are some of the main changes that directly affect consumers.First, not everyone can file for Chapter 7 Bankruptcy. If you make too much money, you will have to file Chapter 13 and make an attempt to repay your debt. In order to determine whether or not you are able to apply for Chapter 7 Bankruptcy, you will need to compare your income to the average income of families of the same size as yours in your state. As long as it is equal to or below the average, you can still file for Chapter 7.If your income is greater than the average, you will have to pass the “Means Test” to determine if you can file for Chapter 7 Bankruptcy. Under these bankruptcy laws, you must be able to show that your disposable income, minus certain expenses, is truly insufficient to repay your debts. If you cannot pay your debts, you can still file for Chapter 7 Bankruptcy under the new bankruptcy laws.Additionally, the new bankruptcy laws require all individuals who are filing bankruptcy to go through credit counseling with a government approved credit counseling agency. This counseling is used to determine whether or not bankruptcy is truly needed. The government does not care if you can clearly show that you need to file for bankruptcy. You still must attend counseling.If you have attended counseling, proven that you cannot repay your debts, and showed that your income is not too high, you can still discharge your debts under the new bankruptcy laws. The purpose of the new laws is to prevent people from filing bankruptcy simply because they do not want to go through the trouble of repaying their debts, when in reality they have the money to do so.

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