Bankruptcy Law Changes Designed To Hold Debtors Accountable

Posted on January 5, 2011

It’s no secret that bankruptcies have been increasing. As such, a few years ago retailers and other companies were claiming large losses and as such the bankruptcy laws were changed. These changes make filing for bankruptcy more difficult. In 2005, the U.S. government seemed to agree with lobbyists for credit companies and determined that too many debtors were allowed to get out from under their self-created debt by filing for bankruptcy.

Why were these changes in laws made? In addition, to the increase in bankruptcies and losses to the creditors, people were taking advantage and filing for bankruptcy when they had plenty of money and were using the advantage it gave them to dump their loads of debt. Also, some people would file bankruptcy as often as allowed by law to get out of paying their financial obligations.

The new law added many requirements, including the need to go through credit counseling services before filing bankruptcy. The counseling is also to provide alternatives to bankruptcy and attempts to move more people from Chapter 7 bankruptcy into a plan that will provide the creditors receiving payments through Chapter 13 filings. It added extra burdens for the debtor as well as the attorneys, which not only increased the amount of information collected for bankruptcy filings, but also included many new financial requirements that are beginning to resemble the current income tax code; in other words, it is getting to be very complex. In order to understand the new rules and regulations as well as the reporting requirements, many attorneys will need to specialize in bankruptcy.

There are also penalties in the new law for both attorneys and clients who willfully attempt to use inaccurate information in a bankruptcy petition. If a violation is found by the court, the attorney fees and client costs can be claimed by the court trustee, giving the trustees more incentive to more carefully review all filings in the court.

If you would like assistance with determining what would be the best option for you regarding your debts or you would like to file for bankruptcy, please contact:

(857) 244-1940 or fill out the form on the right.

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