New Chapter 13 Bankruptcy

There have been few changes in chapter 13 bankruptcy laws in the recent past that has made filling for this chapter more difficult and gives greater protection to creditors.

The new law has some features that are different from the previous ones; basically it's some alteration and some new addition to the previous law. The most important part of new law is the new disposable income test. This is a test done to make sure that a debtor qualifies for this law filing. In this test he needs to propose a 3 to 5 years repayment plan and his ability to do so. According to older law it was up to the judge to decide how much a debtor had to pay based on his income and historic data.

In the new Chapter 13 bankruptcy law a judge needs to calculate the disposable income that is based on personal income and wherein no allowance is approved for special needs, incapacities, disabilities or cost of commuting.

The main reason to enforce this rule was abuse. Under the new law who so ever is considering to file for bankruptcy under chapter 13 needs to go through legal channels and needs to attend the approved course that will provide financial analysis, budget investigation, and credit counseling. This whole course needs to be completed within 180 days before filing for the bankruptcy case in the Bankruptcy Court.

It's not for the court to decide what will be the fees of the course, it totally depends on the individual, he can go for free online classes, or can take help of some non profitable organization etc. The only important thing is that it must be an approved by government course.

This part of law has its own importance as the main concern by the Chapter 13 bankruptcy abuse law policymaker was to avoid repeated filing of petitions by the individuals. This abuse under this law is not impossible however, the probability becomes low.