New Bankruptcy Laws

Dallas • Fort Worth (Ft. Worth) • Plano Texas

There were changes in the bankruptcy laws that went into effect in October 2005, and these changes received a large amount of media attention. However, most of the newspaper articles and television reports were either over-exaggerated or just wrong. Most reports referred to bankruptcy now being “harder to file.” As you will read below, this is just not the case. (I believe most media members simply read quotes from the credit card companies about it being “harder to file” and didn’t bother to find out for themselves how the law changes really work.)

The general public has been made to believe that, #1: you can’t file a Chapter 7 anymore to wipe out all of your unsecured debt, and #2: now in Chapter 13 you have to “pay it all back.” Both of these ideas are totally false. Chapter 7 is still alive and well, and in Chapter 13 you only pay back the portion of the unsecured debt (credit cards, medical bills, etc) that the Court determines you can afford to pay. Based on my experience, more people pay back $0 to their unsecured creditors in Chapter 13 now than before the law changes occurred.

There are two primary changes with the 2005 bankruptcy law changes. The first change is the credit counseling requirement. Many people think this means you have to attend credit counseling classes before you can file bankruptcy. However, the pre-filing credit counseling requirement can be fulfilled with one internet or telephone session that normally lasts 30-45 minutes.

The second change is the introduction of the “means test.” This is a mathematical formula that the Court now uses to determine how someone’s situation is handled in Chapter 7 and Chapter 13. The formula takes into account household income, household size, house and vehicle payments, and allowances for other monthly expenses. The calculation of the “means test” is done during the free consultation with Leinart Law Firm.

In summary, the changes in the bankruptcy laws weren’t nearly as dramatic as many people have been led to believe. The financial and debt situations of almost everyone are handled in bankruptcy virtually the same as before the laws changed in 2005. If you have debt problems, you owe it to yourself to contact Leinart Law Firm to set up a free consultation to review all of your options.

Myths About the Law Changes - (Don’t Believe Everything You Read)

1. It is now “harder to file bankruptcy” - FALSE.
   As you will read below, almost everyone will have the same result in bankruptcy that they would have had before the law changes. The primary additional step that people have to do is the credit counseling requirement, and as you will read below this requirement has been way overblown by the media and can be accomplished on the internet or phone in 30-45 minutes.
2. People can’t file Chapter 7 anymore – FALSE.
   People can still wipe out all of their unsecured debts (credit cards, medical bills, etc) through Chapter 7. The only difference is that the calculation for qualification is a bit different that before the law change. First, there are various income levels depending on the household size of the person or couple filing for bankruptcy, and if the income level of the filer is below that number then it is virtually an automatic qualification for Chapter 7. However, if you are above that number you can still qualify for Chapter 7 under the “means test.” The means test is the mathematical formula the Court uses which takes into account your income and expenses to determine your eligibility. Even though it is a different calculation than before the law change, most people end up with the same result. If someone qualified for Chapter 7 before the law change, they will almost always still qualify now.
3. In Chapter 13, you now have to pay all of your debts back – FALSE.
   You only pay back the portion of the unsecured debt that the Court determines you can afford to pay. The amount that someone pays back is determined by the “means test” calculation of income and expenses, and most people pay back very little (if any) of their unsecured debt. Based on my experience, more people pay back $0 to their unsecured creditors in Chapter 13 now than before the law changes. I don’t believe that the credit card companies anticipated this when they were pushing for the changes to be approved by Congress!
4. Before filing bankruptcy, you now have to attend credit counseling classes for 6 months - FALSE.
   In reality you have to fulfill the credit counseling requirement at some point in the 6 months before your case is filed. The session can be done on either the internet or by phone, and it typically takes 30-45 minutes. In fact, many people perform the session the day before, or even the same day, the bankruptcy case is filed.

New Bankruptcy Laws

The changes in the bankruptcy laws weren’t nearly as dramatic as many people have been led to believe. The financial and debt situations of almost everyone are handled in bankruptcy virtually the same as before the laws changed in 2005. If you have debt problems, you owe it to yourself to contact Leinart Law Firm to set up a free consultation to find out about your options.

Contact Us

We offer a complimentary consultation and evaluation to ensure that we can help you with your financial matter, and discuss how the bankruptcy laws can work for you. Please schedule your no-obligation, free, confidential consultation and evaluation with a Texas bankruptcy lawyer by calling us toll free at 1-800-518-DEBT (3328), or filling out our online bankruptcy evaluation or quick e-mail intake form.

Convenient Locations

We offer multiple office locations where you can personally discuss your options and how we can help you. We have offices conveniently located in Dallas and Fort Worth. Texas.

Contact an Experienced Dallas Bankruptcy Attorney

Please schedule your no-obligation, free, confidential consultation and evaluation with an experienced Dallas Bankruptcy Attorney by calling us toll-free at 1-800-518-DEBT (3328) or filling out our online bankruptcy evaluation or quick e-mail intake form.

Tags: chapter 7, title 11, united states code, united states bankruptcy law, bankruptcy law changes, united states code, dallas bankruptcy attorney, new bankruptcy laws, bankruptcy debt advice, dallas bankruptcy attorneys, personal finance, credit counseling, bankruptcy laws, insolvency law, credit card, title 11, means test, chapter 7, file bankruptcy, law changes, law information, law firm, fort worth, laws, dallas, bankruptcy, finance, business, credit, texas, debt