Differences Between the Bankruptcy Law
Generally the bankruptcy laws are standardized on the country wise by federal bankruptcy law, but individual states at times have their own laws set and then standardization on country wise becomes difficult. States can in isolation choose their own exemption rules, filing and withdrawal rules etc. so before filing a case it is important for the debtor to check with the state laws whether they are in accordance with the country laws or not.
There are six different types of bankruptcies and the laws for all them are different. In fact many a times these six different types of bankruptcies are known as six different laws of bankruptcies.
For example, chapter 7 and 13 are individual related bankruptcies while chapter 11 is known as business bankruptcies. Chapter 9 is known as municipality bankruptcy and only the municipal authority has the right to file this petition.
Changes have been made in chapter 7 bankruptcy. Income limits have been introduced which may restrict an individual from filing a case of bankruptcy.
One of the law under bankruptcy states that when a bankruptcy case is filed, no creditor under any law is allowed to take legal actions against his debtor unless the case is resolved.
Initially, any one could file a bankruptcy case for chapter 7 and 13 at any point of time but after the new law, for filing either chapter 13 or chapter 7, an individual within six months from the date of filing, needs to attend a session of credit counseling.
Before the new law, arrangements of bankruptcy would ease the debtors of their debts but after the new law, a debtor needs to pay to attend an education class so as to get relieved from his debts.
Before the new law, the decision whether an individual or a business organization was eligible to qualify for the chapter 7 bankruptcy was taken by the court but after the new law, this is decided by two part income means test. If someone fails to qualify the test, they fail to qualify the eligibility criteria for filing the case as well and are forced to transfer to chapter 13 bankruptcy cases.
Under the old law, the waiting period for the filing of another chapter 7 bankruptcy case was 6 years which has now been extended to 7-8 years under the new law.
But as for the changes in the chapter 13 bankruptcy case, before the new law, the amount of debt to be repaid was decided by the court but after the new law, the court needs to follow the IRS guidelines which are stricter than what they used to be.
The median plan decides for you now that for how long you are going to pay the debt. Initially it depended on you but now it depends on your income.
Under the new law, you can discharge very few debts in chapter 13.
There are a number of differences between the old and the new law. The new bankruptcy law has become all the more strict for the debtors!
