Debt Consolidation Refinance Advice: Chapter 13 Bankruptcy versus Ch. 7 BK
Under the old bankruptcy laws, most debtors chose between a liquidation proceeding under Chapter 7 of the Bankruptcy Code and a wage-earner repayment plan under Chapter 13. Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), new bankruptcy law, a two-part means (income) test now determines if your are eligible for Chapter 7 or must file under Chapter 13 for relief. And, because the new law imposes stricter requirements on lawyers, it’s harder to find an attorney to represent you in a bankruptcy case.
The new law mandates that all debtors must get credit counseling with an agency approved by the United States Trustee’s office before they can file for bankruptcy. Once the bankruptcy case is over, all debtors must attend additional counseling on budgeting and debt management before bankruptcy discharge of debts can occur.
“There are dozens of catches that will make it difficult for people who legitimately need to file for bankruptcy,” says Travis Plunkett, legislative director for the Consumer Federation of America. “The...
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