Bankruptcy laws changed on October 17th, 2005. To many of us bankruptcy attorneys, that is a day that we will never forget. That is also a deadline that we hope to never see again. So, after over two and a half years of still practicing bankruptcy law, here are a few things that I have noticed since the bankruptcy laws have changed:
1) Most people are still qualifying for a Chapter 7 bankruptcy, even if their income level is over the median income level for the state they are filing in. The median income level in Georgia is, as it stands right now, around $39,000 for a family of one, $51,000 for a family of two, $59,000 for a family of three and $68,000 for a family of four. The more individuals living in the house, the higher the median income. If one is below the median income, generally speaking, he or she will qualify for Chapter 7. If they are above the median income, there is a great chance that they will still QUALIFY for the Chapter 7! I have filed many successful Chapter 7 bankruptcies for individuals or families whose income was a significant amount above the median income level. For example, I had a family of 4 whose income was above $100,000 and successfully got them through a Chapter 7.
2) Even after 2.5 years, many people wrongly believe that they do not qualify for either Chapter 7 or Chapter 13 bankruptcy. Some clients of mine, whose income was way below the median income level, were told on either bad advice from family, friends or even their creditors, that they did not qualify for a bankruptcy or that bankruptcy was not an option to them! Only after their wages had been garnished or bank accounts frozen by creditors did they call me for advice. If not for this bad advice, they probably would have talked to me or another bankruptcy attorney in time to stop the garnishment. An individual should never let anyone advise them about bankruptcy laws unless they are getting that advice from a Bankruptcy attorney. I, along with most other bankruptcy attorneys, offer a free consultation. It just makes sense for someone to know all of their options before they start ruling out certain ones. Further, an individual should never listen to any advice from their creditors for the creditor is trying with every trick of the trade to get them to continue paying the debt that is owed.
3) The two required courses, the credit counseling course and the debtor education course are mandatory. There are not too many loop holes around this requirement. Failure to take the credit counseling course probably will result in automatic dismissal of the bankruptcy case. Failure to take the debtor education course will result in the bankruptcy Case being dismissed without the individual obtaining a discharge. The courses are simple, short and can be taken either over the Internet or over the phone. None of my clients have ever had a problem taking either one of them.
4) The dreaded audit has not been as bad as many attorneys originally thought it would. I have had four of my Atlanta bankruptcy clients audited. If I remember correctly, the clients had already provided me with most, if not all, of the documentation that I needed to provide the the auditing company prior to their bankruptcy case being filed. Most documents that the auditing wants are those that the client should have already produced to the attorney. Most documents that are requested include 6 months of pay stubs or proof of income, six months of ALL bank statements and tax returns for two years.
5) Bankruptcy numbers are almost back to where they were prior to the laws changing. Many thought it would take longer, but with the struggling economy and housing market, bankruptcies are rising and will probably continue to rise for the next few years.
All in all, the new bankruptcy laws did not change anything for the average debtor. There are certain procedural changes and a few more court hearings in some bankruptcy cases, particularly Chapter 13 cases, but generally speaking, individuals are still able to get relief from their debts the same way that they used to under the old law. The most drastic changes that most debtors actually see with the new bankruptcy laws are the course requirements.
Brian Limbocker
Limbocker Law Firm, LLC
2470 Windy Hill Road SE Suite 300
Marietta, GA 30067
Phone: 770-933-5355
Comments