New here? Start with these articles to learn about US bankruptcy, debtor bankruptcy
alternatives like debt consolidation, debt settlement, debt negotiation, and debt management.
You'll also learn the causes of debts that can lead you to file bankruptcy and how to recover
from it.Tinley Park Bankruptcy Lawyers Discuss Bankruptcy Reforms
Bankruptcies have been on the rise in the US since the mid-1980s, reaching a whopping 1.6 million in 2004. And Tinley Park bankruptcy lawyers have been at the forefront of helping their clients through this difficult time.
Because of the unprecedented increase in bankruptcies and at the urging of creditors who lose billions of dollars each year in discharged debt, Congress began looking at ways to tighten the requirements for filing bankruptcy. Some felt that the bankruptcy system was being abused or was used too often as a remedy for irresponsible behavior. Others argued against reforms, citing that making it harder to file bankruptcy was placing undue stress on low income families and small businessmen. Opponents argued vehemently against the reforms, testifying before the committee that bankruptcy was neither overused nor misused in general. They offered proof that 91% of bankruptcy petitioners did so because of medical bills, divorce or job loss. In the end, however, a set of reforms were agreed upon and signed into law by President George W. Bush on October 17, 2005.
The US Bankruptcy Code had mostly remained unchanged for the 25 years preceding the reforms. The US Judiciary Committee, a part of the US Department of the Treasury that oversaw the investigation into possible reforms, felt that not only were there abuses to the bankruptcy system, but loopholes that allowed excessive filings and even presented incentives for some to file bankruptcy when other methods, such as credit counseling, might help them rectify their debt situation. They began a civil enforcement initiative whereby the committee identified an alarming number of abuses by debtors, attorneys and others involved in the process, such as incorrectly filing documents and discharges of debt that should have been challenged.
In 1997 alone, more than 44 billion dollars in debt was discharged by bankruptcy filings. That equals 110 million dollars per day and 400 dollars per US household. This expense to creditors was eventually passed on to responsible consumers in the form of higher interest rates for loans, high down payments and higher prices for goods in general.
So, what do the new reforms mean to you as a potential filer with Tinley Park bankruptcy lawyers? The new reforms include the following changes or additions to the requirements to file:
– Mandatory credit counseling
– Passing a “means” test to determine ability to repay debts.
– Proof of income and tax returns required
– Mandatory financial management education
– Greater priority for child support and alimony
– Tougher requirements on bankruptcy attorneys for accuracy
– Less “automatic stays” for filers
Tinley Park bankruptcy lawyers can offer you more information on these reforms.
About the Author:
When faced with overwhelming debt and the possibility of bankruptcy, Tinley Park bankruptcy lawyers can help get your financial situation back under control.
Nick Messe | Bankruptcy Basics |
Tags: bankruptcy attorney, bankruptcy filing, bankruptcy law, bankruptcy lawyer, Credit Counseling
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