New Bankruptcy Laws
As a result of new bankruptcy legislation that went into effect as of October or 2005, the process of filing has become a more challenging task for both the bankruptcy attorney and the debtor. Granted, this is just one side of the equation but the bottom line is that this shift was implemented in order to benefit the debtor. The amount of documentation which is now required for filing has increased dramatically. Additional information detailing any and all information regarding expenses and income is now required.
Other stipulations are that “special circumstance documents” must be included if a person’s expenses exceed what the IRS would normally allow. The reason behind these excessive expenses must be proven. Additionally, you must now file what is called a “statement of accuracy” which verifies that your information is accurate and truthful as well. Keep in mind that this new legislation has created additional challenges for the bankruptcy attorney also.
Bankruptcy attorneys now have greater responsibilities to ensure that all of their client’s documentation is accurate and honest. They must certify that all documentation has been thoroughly inspected and that the particular filing is not abusive according to Bankruptcy Court standards. They must also certify that these proceedings are completely acceptable and fall within the parameters of these new laws. Additionally, they must verify that any arguments for extensions or modifications are done in good faith.
The premise underlying these new Bankruptcy requirements
What a person needs to realize is that the main reason for this new legislation was to decrease the number of bankruptcy filings. Debtors are now required to attend debt counseling sessions from an approved and licensed debt counseling organization and they must do so within 6 months of filing the petition. The benefit of this type of counseling is that unknowledgeable individuals are given viable options to filing bankruptcy, which needs to be considered as a last resort anyway.
These counseling sessions also ensure that the individual receives accurate information and is not misguided into making an uninformed decision about filing a bankruptcy petition. This is also a new responsibility of the bankruptcy attorney which they have to attest to although it is a simple matter of the attorney answering the judge’s question of “have you or have you not verified this to be factual and true?”
Additional Bankruptcy requirements
Older laws relative to the filing of a bankruptcy petition allowed the individual to choose the type of bankruptcy that was best suited to accommodate their needs. This is no longer the case, especially where Chapter 7 filings are concerned (65% of current filings in the US) as the new legislation specifically targets the reduction in the amount of these filings.