Recently a new bankruptcy law was introduced and made drastic changes in the laws regarding the filing bankruptcy. This article will explain the major changes brought about by this law.
According to the new bankruptcy law, a person filing bankruptcy must undergo credit counseling with an agency authorized by the office of the Trustee of the United States. Once the bankruptcy case is over, filers must undergo another counseling session to learn personal financial management in more detail.
Restricted Eligibility: In the olden days, there was a choice between filing Chapter 7 and Chapter 13 bankruptcy. But the new bankruptcy law makes income as the criterion for filing Chapter 7. The average income of the filer for 6 months must be lower than the median income of their state.
Property Values: As per the old bankruptcy law, people filing Chapter 7 bankruptcy could decide on the value of their personal property depending on the amount it could fetch at an auction. But the new bankruptcy law states that the value of the property should be replacement value. This increases the value of the property and ensures that the property of more filers will be taken and sold off by the trustee.
State Exemptions: As per the new bankruptcy law, the state’s exemptions will be applicable only for the people who have been the residents of the state for 2 years. For those who have stayed in the state less than 2 years, the exemptions offered by the previous state of residence are applicable.