New Bankruptcy Law Did Not Slow Down Filings

Under the new bankruptcy law, persons looking to file must complete a debt counseling program during which it is determined if the person has the ability to pay their loans under a court-ordered plan. Once the bankruptcy goes through the court, before the debts are discharged, they have to attend a second session on debt management and money management. The new bankruptcy law does not stipulate they follow anything they learn in the sessions, only that they have to attend before their slate can be wiped clean.

Additional changes allows for some assets that used to be exempt to be confiscated and sold by the bankruptcy trustee to satisfy a portion of the debt. State exemptions for certain properties also play a role in the new bankruptcy law. For example, a person living in Nevada, having met the residency requirement and passed the bankruptcy income test, can claim a $15,000 exemption on a motor vehicle. In California the exemption is $2,300 under the new bankruptcy law.

Passing Means Test Is First Important Step

If their current monthly income exceeds the state average income they will need to file for Chapter 13 bankruptcy. Additionally, an income level as low as $166 a month over the average will push them towards Chapter 13, under the new bankruptcy law, regardless of actual living expenses. All expenses are governed by the Internal Revenue Service’s expense guidelines, even if the area in which they live has a higher cost of living.