Before heading out in search of a bankruptcy attorney, it is a good idea to glance over the criteria that needs to be met in order to file for either Chapter 7 or 13. The laws were modified in 2005, making it more difficult to file for bankruptcy. As any bankruptcy lawyer can tell you, some prospects with high income may not be able to file for Chapter 7 and must repay a portion of their debt under Chapter 13. Additional legislation requires a person to seek a credit counselor for advice on debt management and budgeting before debts can be cleared.

Formerly, most filers opted for Chapter 7, or complete liquidation, over that of Chapter 13, which involves repayment. Now, however, filing for Chapter 7 has been restricted for those with high income. Anyone whose income is less than that of the median income for a same-sized household in their state is still able to file, but those who exceed it must pass the means test in order to proceed.

The means test considers whether a filer has enough disposable income to pay a Chapter 13 payment plan. In order to determine this, the test subtracts allowed expenses and debt payments from a filer’s current monthly income. Leftover income must be below a certain amount in order to meet requirements for filing for Chapter 7.

With a Chapter 13 payment plan, filers are required to hand over all of their disposable income. Because of the changes that occurred in 2005, expense amounts are now dictated by the IRS. For filers above the median income, this means that they must weigh their disposable income against allowed expenses and not their actual expenses.

Prior to filing, a person must receive credit counseling with an approved agency. The purpose here is to discover whether it is really necessary to file for bankruptcy. Such counseling will weed out those facing debts they simply do not want to pay and determine who is facing debts they will never be able to repay. Even if no option outside of filing for Chapter 7 is feasible, a filer must still participate in counseling – however, no one is required to go along with any repayment plans proposed by such an agency. Proposed payment plans must be submitted to court along with a certificate proving participation in counseling. If you opt to move forward, you are required to attend more counseling near the end of your case. Debts will not be wiped out unless this extra counseling is fulfilled.

Unfortunately, changes in the law have also increased attorney fees. This is because the new laws added complicated requirements that make it more time-consuming and expensive for lawyers to represent clients in these cases. Now that lawyers are required to personally attest to the accuracy of all information provided by their client, they must spend more time researching this information. Thus, attorneys are forced to bill clients for longer hours.

Additional changes in the law that can negatively affect filers include how property is valued – now replacement cost is considered instead of auction cost – and how long a filer must live in a state to utilize a state’s exemption laws.

Author Bio: Stewart Wrighter recently spent time researching bankruptcy with the help of a DallasTexas bankruptcy attorney. He was very impressed with the quality of workmanship performed by the Plano bankruptcy lawyer at the same practice where he worked.

Category: Finances
Keywords: Dallas Texas bankruptcy attorney,Plano bankruptcy lawyer