The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPC), brought about a few changes to the current USA bankruptcy laws, but in essence the structure of the 1978 Act remains the same.
Bankruptcy is a legal procedure that protects an individual or business that cannot pay its debts; it also protects the creditors. These legal proceedings may be:
o Voluntary, which is initiated by an individual or business unable to pay its debts.
o Involuntary: where the creditors take action, provided they prove the individual or business has debts in excess of $5,000.
Filing For Bankruptcy, Salt Lake Bankruptcy Attorney, Bankruptcy Attorney Modesto CA,
Resolution
Once the petition is filed, the court will decide under one of the three following means:
Chapter 7 calls forliquidation; that is the sale of the assets of the debtor and the proceedings of the sale used to pay the claims of the creditors. Excluded from this chapter are railroads, banks, insurance companies, or government units. The act specifies that secured creditors have priority over unsecured creditors.
Chapter 11 calls for reorganization; that is the individual or business is given 120 days to present a reorganization plan that eliminates the factors that cause the distress. Such plan must be confirmed by the court. In many instances the plan works and the bankrupt individual or business comes out stronger and ready to function on its own once again. Federated Department Stores, Macy's, Texaco, and some airlines are examples of reorganization.
Chapter 13 calls for repayment; that is the individual or business must file with the court a plan for repaying specific debts. This chapter applies to debtor with liabilities of less than $350,000 in secured debts, and less than $100,000 in unsecured debt. The plan presented to the court will specify the amounts and periods of time over which they will take place. The court will normally allow three years, but in some cases the period can be extended up to five years. To make sure the plans run smoothly, the court will appoint a trustee who will receive the payments and in turn satisfy the creditors' claims.
Changes in the 2005 Act
The new law prohibits filers with high income from using Chapter 7. Anyone, whose "current monthly income" is over the median income in his state, doesn't qualify. In addition they must meet the "means test."
Another significant change included in the Act of 2005, impacts lawyers rather than the petitioners. Lawyers are now made accountable for the accuracy of the information provided by their clients. Consequently, attorneys taking on a case, must research do due diligence on their own clients; which means that they will spend greater time and resources on a case. Needless to say: they must charge higher fees.
Conclusion
The word 'bank-ruptcy' means that something is broken. In the middle ages the money lenders and usurers would be so enraged at their debtors' inability to pay them back that they would break their benches on the poor souls' backs-banca rota.
England had a more civilized way of dealing with insolvent debtors people: prison. Mr. Micawber --the garrulous and kind-hearted character of Charles Dickens' David Copperfield- "was arrested early one morning, and carried over to the King's Bench Prison in the Borough."
In the United States we do have a compassionate system of laws that protect the individual from the sometimes impossibility of paying debts. Our legal court system prevents the abuses and misery of the European system.
Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
Rating of File For Bankruptcy
Get Online Application at online Bankruptcy Lawyer.
0 comments:
Post a Comment