Mirror of Justice

Bankruptcy Law and the States

July 18th, 2009 at 02:52pm Under Discrimination Law

Although federal bankruptcy law mainly regulates bankruptcies, the individual states can have specific guidelines for the process within their jurisdiction. States can typically choose to have their own rules that govern the types of exemptions that the debtor is allowed to keep after filing for a discharge of their debts.
For instance, some states will allow debtors to keep their homes no matter how expensive or extravagant they are whereas other states will force the liquidation of property as an attempt to pay off the debts. Other variations include the types of debt that a debtor can discharge, although many of these are federally mandated without exception.
Florida bankruptcy law heavily favors debtors in regards to the property that they can retain. In fact, Florida has a reputation for being one of the most liberal states in the country for debtors to petition for a discharge of debts. The state government has elected to opt out of the federal regulations concerning the debtor’s lawfully retainable property.
According to Florida bankruptcy proceedings, you can keep more of your personal property during a bankruptcy than in any other state. As a result, many people who plan to file often move to Florida with their assets in order to take advantage of the state’s lenient bankruptcy law.
To see a contrast in the how the bankruptcy law changes from state to state, look at the exemptions that the Maryland law allows. Maryland is stricter in regard to the debtor’s assets that must be liquidated in a bankruptcy.
For instance, a debtor who files bankruptcy in Maryland is only entitled to keep $500 worth of household goods and furnishings as well as $3,000 of cash in their bank accounts. Also according to Maryland bankruptcy law, debtors can only retain up to $2,500 worth of personal property and the rest must be sold or liquidated so the proceeds can go towards paying the creditors.
Different states have varying guidelines regarding bankruptcy law, but each category has specific regulations, too. In a Chapter 7 bankruptcy, for instance, you can have many of your debts completely discharged so you can get a fresh financial start.
On the other hand, Chapter 13 bankruptcy requires you to enter into a repayment agreement that the courts will oversee and make provisions to help you pay off your creditors in a timely manner. Rules also vary as to how much of your property you are allowed to retain when going through a bankruptcy.
Although federally regulated, bankruptcy law hinges on the guidelines of the individual states and the bankruptcy chapter that the debtor chooses to file. While some states have lenient laws that favor the debtor’s situation, the bankruptcy laws in other states tend to favor the creditor.
Until the recent amendments to the federal bankruptcy code, the federal guidelines favored the debtor, but those times have changed and now it is much more difficult for a debtor to completely discharge their debts. As a result, many people either try to find solutions through loopholes in the system or they deal with the ramifications that filing for bankruptcy will have on their financial future.

Are You Confused About Bankruptcy Laws?

July 18th, 2009 at 02:52am Under Discrimination Law

Unless you are a lawyer, the odds are that you have not spent much time studying bankruptcy laws. If you are someone who is experiencing financial trouble personally or with your business and you find yourself in unmanageable debt, then you need to find out more about bankruptcy and ways to avoid it if possible.

At first, bankruptcy may seem like an attractive option. The goal of US bankruptcy provisions was to help the individual in debt be released from these obligations so that he can start over completely. The creditors are paid immediately but only as much as what the bankruptcy court can make after selling all the debtor’s non-exempt property and goods. Therefore, the creditors get money right away but, in all likelihood, they will not be repaid in full. Once you file for bankruptcy, you are absolved of your debts and your creditors can no longer harass you or sue you for the money. This reason is why many creditors would prefer you do not file bankruptcy in the first place, they want to receive their money back in full even if it does take longer than was originally agreed upon.

Even though Chapter 7 bankruptcy absolves your debt and allows you to start over, you are starting over with almost nothing. All of your non-exempt assets have been sold off and you have most likely lost many friends who trusted you with their hard-earned money. Your credit score also collapses. Depending on the state in which you live, the fact that you filed for bankruptcy will show up on your credit report for at least ten years if not longer. It is very difficult to start over again when you have no funds and cannot borrow money without incurring very large interest rates.

Therefore, you want to avoid filing for bankruptcy at all costs. If you feel as though you are sinking deeper and deeper into debt, you need to talk to a financial expert. They might be able to help you negotiate new contracts with your creditors so that they receive their payments in full and you can avoid the liquidation of all your assets.

Bankruptcy Law

July 16th, 2009 at 08:53am Under Discrimination Law

Bankruptcy is a legal procedure in which people or businesses that are not in a position to pay their debts are dealt with. Creditors will normally file petition against individuals or businesses that are not in a position to pay their debts after a long period of time. Debtors are normally given a chance to appeal against the petition filed against them for their failure to pay their debt.  There are times when the debtors are not in a position to pay their debts as they fall due. In this case the bankruptcy law comes in handy. This law allows the debtor to divide his assets among the creditors as a way of settling the debt. This is done under the supervision of trustees who review the debtors petitions and also have the responsibility of overseeing the pay plan in the debt recovery process.In the United States of America, the bankruptcy laws are supervised in the courts in a special procedure. However with time this may not be so. The law has taken a new path meaning it will no longer be as easy for new filers to file a petition against debtors as it has been. In the past, debtors were allowed to pay their creditors as they earn, but the new law  may make this impossible.There will be a procedure where the debtors will be required to go through counseling in matters to do with handling cash and on how to manage debt. It is only after the completion of this that one’s debt can be forgiven accordingly. In the old rule, one was able to choose the best way to deal with their financial situation.

Important Facts About Bankruptcy Laws

July 16th, 2009 at 02:53am Under Discrimination Law

Due to the latest law changes in bankruptcy, it is becoming very difficult for people to file bankruptcy. Due to these changes those people who are high income earners, who used to pay their debt at Chapter7 have now to repay their debts at chapter13. Before the prosecutor (debtor) to file a case of bankruptcy, there must be budget counseling and management session of their debts before any of their debts can be wiped out of the phase. Since the new law has imposed new requirements, the attorney finds it difficult to represent you in a bankruptcy case since lawyers aren’t favored by the new law.As a result of the new regulations, claimers are not privileged in choosing the kind of insolvency that is friendlier to them. Meaning that (liquidation-chapter 7 bankruptcy opposing repayment-chapter 13 bankruptcy).As a result, new rules are more efficient as it is not used by high income earners.The choice of using either chapter 7 or chapter 13 comes across from what one earns per month. The monthly income, depending whether one is a high income earner is or a low income earner. Incase of a lower income or one same to the median, chapter seven is used either way one passes the means test.The represented trial permits one to conclude whether you have adequate throwaway profits after Hiring out the liability disbursements and the expenditures tolerated so as arrangement on Chapter13 bankruptcy.Depending on the total that’s missing after the working outs of the review revenue with the permissible operating cost and balance compensations you can choose whether to use part seven go or else. The simplicity of this can be made via the means examination calculator that’s online by means of the assent profits, expense orthodox of your situation, region and spring to end your aptness in this scheme. Requirements for bankruptcy counselingCredit psychotherapy by the United States Trustees office should be permitted to resolve whether to file under chapter7 bankruptcy laws or chapter 13 bankruptcy laws. At the ending of this case an individual go to one more therapy meeting to study of the private monetary supervision.Since chapter 13 uses the old rules, it is cheap and readily available since the disposable income is devoted to the repayment plan. This chapter filers use their disposable income given by expense amount dictated by the IRS-not their actual expenses-if their income is higher than the median state whereas these expenses are subtracted from the filer’s actual earnings each month but from filer’s income six months before filling.

Dealing With Bankruptcy Laws

July 15th, 2009 at 02:52pm Under Discrimination Law

It is always a matter of importance to keep ourselves updated with the current development and happenings that go on around us. It is especially crucial to be aware of the changing laws because you never know when you might need to face it. This is one fact that we cannot emphasize enough. Approaches to dealing with bankruptcy are guided by a number of laws. At one point or another in your business venture when you find yourself in this situation, it will require you to verse yourself well with the truths concerning the legal procedures that you should undertake as far as paying your debtors is concerned.Currently, there have been changing sections of the bankruptcy laws and they may not be as you used to know them previously. Many of the changing laws will make it a bit harder to prove your need for filing insolvency and in addition if you manage this stage, the process might take longer than expected for it to go through.Other aspects of the laws that are prone to change are the fees payable to the attorneys. It is likely that the fees will go up by up to 100 percent. The different chapters of the law will also be revised especially chapter 7 and 13. Once this takes effect, many debtors will be forced to file under chapter 13, which will see to it that debt cancellation will almost be impossible. This will prove to be much tougher on many debtors, who would otherwise prefer chapter 7 since it gives room for debt cancellation. For more information please keep yourself updated by visiting the bankruptcy law web pages.

New Bankruptcy Laws

July 15th, 2009 at 08:53am Under Discrimination Law

Someone said that the only permanent thing in the world is change itself. For this reason, we do not expect anything to last forever as it is today. What more do we need to be told? With this fact on the table, isn’t it true that we need to keep ourselves updated about the changing legislation, laws and regulations that govern our lives and our businesses?Are you a business person who has had to file for bankruptcy before, simply because you had more debts than assets and you could not manage to pay your debtors? Do you still recall what the law required of you and what the different chapters of the same required of you? Well then, all that might be changing now.There are new bankruptcy laws that are now in use and you need to familiarize yourself with them, just incase you might find yourself in this sticky situation, or you might know someone who is going through the same.  Just to mention a few of the changing rules, in the old law, if you filed under chapter 13, it was easy to determine for yourself what you would be paying to your creditors on a monthly basis but that will no longer be possible.In the new bankruptcy law, the IRS will be involved in determining what you are worth per month after deductions of your basic needs of food, clothing and rent and the remaining amount will be divided in certain proportions to your creditors. Life will be a lot harder for debtors under this new law, but when the going gets tough, the tough get going.

There Are Bankruptcy Laws That Can Protect Us

July 14th, 2009 at 08:53am Under Discrimination Law

Some times people get to a point where they have taken on too much credit and become overpowered by the weight of too much debt, just remember though that there are bankruptcy laws that can protect us. There are some creditors that will think nothing of bullying and harrassing people who do not pay on time, this isn’t such a bad thing when there are people that are just plain irresponsible. In most cases though people who can’t pay the bills are living at the bottom financially. They don’t know where to turn for help to get out of their situation, and the constant telephone calls and threatening letters only add to the stressful situation.
This is one of the reasons why people get to the point where they file for bankruptcy. Bankruptcy laws are very clear, creditors cannot contact the people one they have filed, although some may continue to call and plead ingnorance to the bankruptcy filing. When this happens the person’s attorney will probably write a letter to the company reminding them of bankruptcy laws. This will most often stop the harrassment and give the clients of these companies some much needed relief.
Bankruptcy Laws – Learning All About Them
When someone decides to seek protection from creditors, they will go to an attorney to find out about their options. If you find yourself in this situation, you should ask about the bankruptcy laws that pertain to you and your individual situation. Learning the bankruptcy laws can save you a lot of worry when going through this arduous process. You need to understand that the laws were put into place to protect people from having to deal with addtional anxiety in an already stressful situation. To a creditor, the difficulty that someone is going through doesn’t matter at all.
The creditors are the main reason that bankruptcy laws were established. The bankruptcy laws’ purpose are to protect the individual who is forced to file for bankruptcy, from the creditors that are only interested in collecting the money due to them. Although these laws are in place, there are some companies that will stand on the fine line of the law and even cross this line to get their point across. This is why you must get a good lawyer involved with your case as soon as possible, so that you have a professional intemediary that can deal with the less than professional companies.

2005 Bankruptcy Law Changes

July 12th, 2009 at 08:52pm Under Discrimination Law

The point behind the 2005 bankruptcy laws is to make it hard to file for convenience bankruptcy. Credit card companies and other creditors that have been pushing for it, claim that most cases of consumer bankruptcy involved careless people that have spent their money irresponsibly and are now looking for an easy way out.
New bankruptcy laws should make it more difficult for people with debt problem to file for bankruptcy, legislators claim that this way much more bills will be paid, the creditors will save huge amounts of money, and that will in turn cause interest rates to drop.
So how to explain new bankruptcy laws? Below you will find some of the mayor changes:
1st – the most important change, no more easy Chapter 7. Until the 2005 bankruptcy laws most filers have been allowed to file for Chapter 7. Chapter 7 essentially makes it possible to have all your debts cleared away.
But here is the catch, the new bankruptcy law is requiring a means test. So what is a means test? It is actually a test consisting of two parts, first will use a formula to exempt expenses.
That means that your basic living expenses like food and rent are compared to determine if you will be able to return at least 25% of your debt. The bad news here is that an IRS formula is used here, and if IRS calculates that your expenses for something should be lower, youre stuck with it.
The second one will test if your income is larger then median income of the state you live in, if it is you will have to file for more restrictive Chapter 13, and that means that you will have to pay back some of your debt in the next 5 years.
2nd – you will now have to hire a lawyer. Chapter 13 is just too complicated for regular people to file for by them selves. And with Chapter 7 being now more restrictive a lot of people will have to file Chapter 13.
3rd – bankruptcy lawyers are now more expensive since under new 2005 bankruptcy laws they are legally held accountable for their clients, or to be more precise information filed on behalf of the clients.
Because of that many lawyers providing pro bono services have stopped with that practice because of new bankruptcy laws.
4th – credit counseling is now a must, you are required to go through the credit counseling in the next six months following your filing for bankruptcy.
5th – some bills will have to be paid. For example taxes (surprise, surprise) or college loans must now be completely paid back. There is much more debts on the no forgives list, check with your lawyer if some of those apply to you.
6th – with the 2005 bankruptcy laws very little room have been left for debt problems caused by job sickness, losing a job or any other unforeseeable problem.
So what all of that means to a regular person? It will be very difficult to file for bankruptcy now. It will take more of your time and money then before. However if you do decide to go through with it I hope that this article has been able to explain new bankruptcy laws and difficulties, and that it will help you with your decision.

Key Features of the Bankruptcy Law

July 12th, 2009 at 02:53am Under Discrimination Law

Bankruptcy law provides for a plan that allows a debtor who is unable to pay his creditors to resolve his debts through the division of his assets among his creditors. This also allows the interest of all creditors to be treated with equality. Certain bankruptcy laws allow a debtor to continue his business and use the revenue generated to pay off the debts. An additional aim of bankruptcy law is to allow certain debtors to liberate themselves of the financial obligations they have accumulated after the division of their assets. Bankruptcy law includes comprehensive access to civil litigation, credit, consumer law and commercial transactions.

Bankruptcy cases are either voluntary or involuntary. Voluntary bankruptcy cases involve debtors petitioning the bankruptcy courts. In involuntary bankruptcy, creditors rather than the debtors file the petition. Voluntary bankruptcy cases are majority whereas involuntary cases are rare except occasionally in business settings to force a company into bankruptcy so that creditors can enforce their rights.

Bankruptcy law prohibits some filers with higher income from using chapter 7. To file for chapter 7 current monthly incomes against median income is measured. If it is less than or equal to median income, chapter 7 can be filed. If it is more, the ‘means’ test must be passed to file for chapter 7 which is the requirement of the new bankruptcy law.

The purpose of the ‘means’ test is to find out certain allowed expenses and debt payments are subtracted from the current monthly income. f the balance is below a certain amount chapter 7 can be filed. Bankruptcy law can be broadly classified as follows:

Co-operative bankruptcy is filing of chapter 7 or chapter 11 by co-operations and partnerships in which the trustee appointed by the court sells the assets and distributes the proceeds to the creditors. The trustee’s commission, priority debts and debts to unsecured creditors are paid on a pro rata basis.

In chapter 7, the debtor’s business operations cease once the case is filed. On the other hand in chapter 11 the business typically remains in operation and the debtor is given the same right as a trustee.

Personal bankruptcy is commenced by an individual filing chapter 7, 11, 12or 13. The debtor is allowed to exempt certain property (household furniture, jewellery, clothing, pensions, insurance policies and other assets) from liquidation by the trustee. Exemptions vary from State to State. The automatic stay takes effect immediately upon the filing, which prohibits collecting money, or taking property from the debtors. It usually remains in effect through out the case.

In chapter 7 bankruptcies, the debtor files a petition with the court with detailed financial information about his assets, debts and income. These papers are executed under penalty of perjury, the duration being three to four months. Chapter 11 bankruptcies are a reorganization procedure used by business partnership and co-operations. In this case, the debtor will act on his own as a trustee and is called a debtor ‘in possession.’

As a general proposition, bankruptcy laws state that older income taxes (more than three years old) can be wiped out in bankruptcy, but not the new incomes taxes. Prior to filing bankruptcy, the debtor should have his own particular tax situation assessed. As a general rule, debtors filing bankruptcy continue to complete their own returns and pay their own post-bankruptcy taxes.

Bankruptcy Laws

July 11th, 2009 at 02:52pm Under Bankruptcy Law

Bankruptcy Laws

The passage of the tough new bankruptcy laws in 2005 was supposed to benefit consumers in the form of reducing losses to lenders by making it harder to file bankruptcy. But two new reports released this week show that the new laws not only cost consumers more in terms of credit card debt, but may actually be encouraging greater losses to banks due to increased foreclosures.

According to new research, after the 2005 bankruptcy reform went into effect, both personal bankruptcy filings and credit card company losses sharply declined.

At the same time, while upfront annual fees on credit cards have been all but eliminated, fees have been climbing and becoming less transparent over the years, and there is no evidence that the 2005 bankruptcy reform reversed this trend…over-limit fees and late fees have been climbing since well before bankruptcy reform, and that this trend continued after the 2005 bankruptcy reform.

Industry consolidation in the credit card market enabled the top card issuers to avoid losses from “price wars” by reducing rates to attract new customers.

The credit card industry might also be able to avoid price competition because of complex, multi-tiered pricing that can make it difficult for customers to comparison shop. These fees and interest rates—complex in their own right—are presented in a form that is difficult to understand. Customers faced with such complex pricing systematically miscalculate and underestimate the cost of credit card debt.

A 2006 report from the Government Accountability Office (GAO) that found not only that bank fees and penalties are continuing to rise for card holders, but that credit card disclosures and explanations of fees are deliberately written in manners that make them hard to understand. The GAO also recommended in a separate report that credit card issuers use existing technology to customize card disclosures to individual cardholders, particularly those with high balances or frequent late payments.

The fact that after bankruptcy reform, interest rates and fees continued to rise and grace periods continued to fall, even though credit card companies reaped tremendous gains from declining bankruptcy losses demonstrates that the credit card market is not price-competitive. This lack of price competition explains why the benefits of bankruptcy reform accrued exclusively to credit card lenders and were not shared with the average American family, and why…bankruptcy reform was a failure.

Negative Impact

Another effect of the bankruptcy laws is the increase in foreclosures and defaults by mortgage holders who can’t afford to make payments on their homes. The more stringent bankruptcy code, by restricting financial relief available under the bankruptcy code and by increased the costs of filing bankruptcy, appears to have increased the number of individuals walking away from their homes, their mortgages, and their other financial obligations without seeking the protection of the bankruptcy court.

Under the new law, most individual filers would not qualify for Chapter 7 bankruptcy, which allows for the liquidation and erasure of most debt. Instead, they would be forced to file under Chapter 13, which requires regular payments of at least some of their debt to creditors.

The more stringent requirements of the new laws may be causing homeowners to “walk away” and let their homes go into foreclosure rather than attempt to file for bankruptcy. The restrictions on bankruptcy filings and subsequent increase in foreclosures puts downward price pressures on neighborhoods where many homes are in default or foreclosed upon.

One of the great lessons and ironies associated with [the new bankruptcy law] is that the new law by increasing the dollar value of assets susceptible to default has weakened many of the financial companies that sought the more stringent bankruptcy code.