It is never fun when a person has to file for bankruptcy, but sometimes an individual is faced with no other options and in the end it can provide some financial relief. However, when you file, you will need to be prepared to answer some personal questions about your finances. You will also have to decide whether you want to continue dealing with your creditors. Understanding bankruptcy laws will help you figure out if filing for bankruptcy is best for your financial situation.
How Will The New Bankruptcy Law Apply To You?
A new bankruptcy law was passed in 2005, and this law makes it more difficult for individuals to file for personal bankruptcy. The law also makes it challenging for an individual to liquidate assets and for a person to start anew financially with a fresh credit history. This new law also means that it is harder for individuals to be eligible to file for bankruptcy.
Understanding bankruptcy laws for personal bankruptcy also means that it is vital that you understand these rules:
- Fees for attorneys and court filings have increased
- Credit counseling is mandatory within six months before declaring bankruptcy
- Your creditors can request to see your most recent tax return
- Individuals must take a financial management class after they have declared bankruptcy
Questions You Should Ask Before Filing for Bankruptcy
You should hire a bankruptcy attorney before you decide to file. This will save you a lot of headache and even prevent the court from dismissing your case due to improper filing. You should also take the time to ask yourself the following questions.
One question you want to ask is whether you will be able pay off all of your current debts within 36 months without financial hardship. If not, you may need to file for bankruptcy.
Another question you will need to consider is your income. You will need to comply with a Means test. This test will determine whether your median income is more than the median income in the state where you currently reside. If it is, you will not be able to file for Chapter 7.
Understanding bankruptcy laws is a very complex process. Trying to file on your own could be detrimental to your case. Consult with a bankruptcy attorney so you will better understand your options and make an informed decision.
Learn more about personal bankruptcy and schedule a free consultation today.