Since then, the economy has dramatically declined. With the massive amount of foreclosures and the collapse of securities, bankruptcies are on the rise again. Records show that in 2008, there were approximately 1.1 million cases filed in the US, up 32% from the year before. But because of the changes in the laws, Chapter 7 may not be a viable option for many who previously qualified.

Does this affect your eligibility for filing Chapter 7? Or will you be required to file Chapter 11 or 13? Here are some of the biggest changes in regards to filing Chapter 7:

Restrictions on Time for Filing

You will not be eligible to file for Chapter 7 if you have filed and received a Chapter 7 discharge within the last 8 years.

Credit Counseling

It is now a mandatory requirement in filing bankruptcy that you meet with a federally approved credit counselor within the first six months of filing, as well as attending a money management course within the district in which you are filing. Most all courses are available online.

Stricter Exemptions for Homesteads

The old laws allowed for protection on the equity in your home based on the state in which you filed. The new laws are more complicated, and require an analysis of where you lived for the majority of the 180 days before filing, how long before the filing the home was acquired, and if you have violated any securities laws or been involved in criminal activities.

The Means Test

According to the new laws, filers must submit to a means test to determine eligibility for Chapter 7:

• Income less than the state’s median levels automatically allows for filing Chapter 7.
• Income greater than the median income requires a further test to see if your “disposable income” is excessive. If it is determined that the disposable income can be projected over the next five years to be more than $100 per month, you cannot quality for Chapter 7.
• If it is determined that disposable income over the next five years will be greater than $10,00 or more than 25% of the unsecured debt to be discharge, one remains ineligible for filing Chapter 7.
• As a last resort, if filers can prove “special circumstances, eligibility may still apply even though you fail the means test.

In order to qualify for a discharge under Chapter 7, the applicant must meet several key criteria.

• You can only apply to discharge your debt once every nine years.
• In accordance with the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, any one applying for and receiving a bankruptcy discharge must participate in a money management class.
• You must not have a past that includes dishonest filings, poor record keeping, ignoring of court orders or fraudulent transfers. Any of these incidents will make it likely for the court to refuse your request for discharge.

Once your discharge is granted, you will be offered protection in several forms.

• Legal action regarding your debts and their collection must cease.
• Your debtors must stop contacting your via mail, phone or other form for each debt that was covered by the discharge.

There are several things that a discharge does not do. First, the debt does not disappear after the discharge. While the company to which the debt is owed must cease collection activities against you, that protection is not offered to anyone who has co-signed or guaranteed the loan. The company to whom the money is owed can go after them to recover the debt.

Bankruptcy discharges do not cover liens, so it is important to keep in mind any outstanding liens. For example: if a debtor had used a car valued at $3000.00 to secure a loan in the amount of $7000.00 but left the loan unpaid, they can include the $7000.00 in their request for a discharge. While the discharge may be granted, the ‘security’ used by the debtor, the car, is not protected and can in fact, be repossessed. In this case, the debtor is only protected for the difference between the original loan and the security or $4000.00.

It is also important to remember that a discharge can be revoked. There are several causes for revocation, generally involving dishonest behavior by the debtor. The court will reverse a discharge decision for several reasons.

• A trustee or creditor asks the court to revoke the discharge.
• Pertinent information was omitted or purposely misstated during the audit portion of the case
• The requestor did not provide information to the trustee regarding property they had acquired
• The debtor lied or used other fraudulent methods to qualify and receive the discharge.

Myth #1: You can file for bankruptcy as often as you like

To prevent abuse, there are rules that govern how often you can file for bankruptcy.  According to the new bankruptcy laws (that were passed in 2005), you must wait longer between bankruptcy filings.  You can file for Chapter 13 bankruptcy once every two years.  For Chapter 7 bankruptcy, you can file once every eight years.  Multiple bankruptcy filings can severely damage your credit score, since each filing can remain on your credit record for up to 10 years.

Myth #2: All debts are completely eliminated a Chapter 7 bankruptcy.

This is one of the biggest bankruptcy myths.  Unfortunately, certain types of debts cannot be eliminated in a Chapter 7 bankruptcy.  Debts that cannot be discharged include: alimony, child support, student loans, and debts that were acquired as a result of fraud.

Additionally, debts that were acquired from legal settlements are rarely discharged.  Therefore, if you owe money to someone as part of a legal settlement, it’s unlikely that this type of debt will be discharged.

Myth #4: You can keep your car and house without having to pay off the loans (when including them in your bankruptcy filing)

You cannot keep your house or car without paying the loan.  In most cases, as long as you are current on your car payment and home loan, then you can keep both your car and home.  If your vehicle is repossessed and you file for bankruptcy before the car is sold, then you may be able to re-claim your car.  In order to re-claim your car, you must agree to pay off the loan.  You will also need to make sure that you have insurance on the car.

Myth #4: Filing for bankruptcy will ruin my reputation.

Unless you’re a famous person, a well-known corporation, or a celebrity, most people will never know about your bankruptcy.  Only your creditors and attorney are likely to know that you filed for bankruptcy.  There are thousands of consumers filing for bankruptcy each month, so it’s highly unlikely that anyone will notice yours.  Even though bankruptcy is a public legal filing, most newspapers don’t have the time, or space to publish all bankruptcy notices.

Myth #5: I’ll never be able to buy a home (or qualify for new credit) if I file for bankruptcy.

This is completely false.  Most people believe that bankruptcy means you can’t buy a home for at least 10 years.  However, you may be able to get a home loan beginning two years after a Chapter 7 bankruptcy has been discharged, and one year after filing a Chapter 13 bankruptcy.  FHA and VA mortgage loans can be obtained as soon as one year after filing for either Chapter 7 or Chapter 13 bankruptcy.  However, it may be a while before you qualify for low interest rates on credit cards and other unsecured debt.

Chapter 7

Chapter 7 is the most common type of bankruptcy and allows you to eliminate nearly all of your debts.  In Chapter 7 consumer bankruptcy cases, you are usually allowed to keep your home and car (as long as the car is secured debt), provided you continue making payments on the loans.  Depending on your financial situation, Chapter 7 bankruptcy can eliminate medical bills, credit card debt, personal loan debt, judgments (unless related to fraud or criminal matters), deficiency debt on foreclosures and repossessions, and personal injury debts (except criminal injury debt, and DUI fines).

Chapter 13

The second type of consumer bankruptcy is Chapter 13.  In a Chapter 13 bankruptcy, your debt will be consolidated, and a monthly repayment plan will be enacted.  Under Chapter 13, you will be required to make monthly payments on your total debt obligations to a trustee.  The amount of the monthly repayment amount (and the length of the repayment period) is calculated based on your monthly income and expenses – and the total amount and nature of your debts.

In most cases, the repayment period is typically three to five years.  Chapter 13 can be used for restructuring car loans (to save a vehicle from repossession), and for repaying back amounts (arrears) owed on your mortgage.  If you do not qualify to file Chapter 7, then your only remaining bankruptcy option is Chapter 13. In certain situations, Chapter 13 can be used to temporarily stop or halt an impending foreclosure.  Consult with an experienced consumer bankruptcy attorney to determine whether Chapter 7 or Chapter 13 is right for you.

Bankruptcy in San Antonio is a legal action for debtors to deal with insolvency. Most debtors are given relief even if there is not a complete discharge of debts.

Title 11 of the United States Code establishes and sets forth the guidelines for bankruptcy procedure. There are multiple types of bankruptcy outlined in Title 11, and debtors are eligible for certain forms of bankruptcy based on their financial situation, their type of business (in the case of a business bankruptcy) and other factors. The court appoints a trustee who oversees the bankruptcy proceedings.

A bankruptcy can be voluntary or involuntary. A voluntary bankruptcy is one that the debtor initiates, as opposed to an involuntary bankruptcy, which is a legal action pursued by creditors against the debtor. In an involuntary bankruptcy the debtor has the chance to contest the bankruptcy petition.

The Bankruptcy Code prevents creditors from pursuing collection attempts against the debtor while he or she is either working out a payment plan or while the trustee dealing with liquidation of assets. The Bankruptcy Code determines all aspects of the bankruptcy, including the chapter of bankruptcy that applies, which bills are discharged and the time period for payment.

2. How does filing bankruptcy stop other creditor actions against you?

As soon as you file a bankruptcy petition, the court orders an ‘‘automatic stay,’’ which is a legal action that prevents creditors from pursuing collection activities or legal actions against you in an effort to collect debt. If the creditor seizes funds after the petition was filed, in many cases those funds must be returned. Your local bankruptcy attorney in San Antonio will explain legal actions that will be taken to recover these funds.

Repeat bankruptcy filers are subject to different rules under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2006 (BAPCA). It is important to consult a bankruptcy attorney in San Antonio regarding how the automatic stay may be handled under the new rules if you previously had a dismissed bankruptcy.

3. How frequently can you file for bankruptcy?

If you filed a Chapter 7 bankruptcy and obtained a discharge, you must wait 8 years before filing another Chapter 7.

You cannot receive a discharge in a Chapter 13 case if you received:

a) A discharge in a prior case under Chapter 7 11, or 12 that was filed within four years of the current Chapter 13.

b) A Chapter 13 discharge in a case that was filed within two years of filing the current Chapter 13.

However, a ‘‘Chapter 20’’ filing may be available to you under the above rules. A Chapter 20 filing is a Chapter 7 case to eliminate unsecured debt followed immediately by a Chapter 13 case to allow mortgage arrearages to be remedied, etc. The reason it may be available to you under the above rules is because the point of the follow-up with a Chapter 13 case is usually to repay a mortgage debt and not to get a discharge from that debt.

4. Do you have to list all your creditors in your bankruptcy petition?

Yes, you are required to list in your bankruptcy petition all your creditors. A creditor is any company or any person, even a family member or friend that you owe money.

5. Will your employer discover that you filed bankruptcy?

You usually don’t have to concern yourself about your employer finding out about your bankruptcy unless your employer is one of your creditors or your wages are no longer being garnished, in which case your employer may follow up to learn why the garnishment ceased.

6. Will you lose your job after filing for bankruptcy?

No. You are shielded against discrimination based on bankruptcy laws that prohibit job termination due to filing bankruptcy.

7. How will bankruptcy affect your credit rating?

Chapter 7 bankruptcy filing remains on your credit report for up to 10 years, and Chapter 13 remains for 7 years. You may start qualifying for loans such as a car loan as early as one year subsequent to filing bankruptcy if you meet the income requirements. However, the lender will likely charge you above average interest rates. It may take five to seven years before you are offered average interest rates again.

8. Can you repay a creditor after you file for bankruptcy?

Under Section 524(f) of Title 11, you are authorized to repay any creditor you choose.

9. Will bankruptcy discharge taxes owed?

There are circumstances which discharge tax debt. For Chapter 7, if you filed your tax return for the year, under the circumstances below your debt will be discharged:

1. The 3-Year Rule: Your tax return was due more than 3 years prior to your bankruptcy filing. If you obtained an extension, the due date would be the extension deadline.

2. The 2-Year Rule: If your late return (filed after its due date and any extensions) was actually filed more than 2 years prior to the bankruptcy filing.

3. The 240 Day Rule: If the IRS assessed your taxes more than 240 days prior to the bankruptcy filing

4. If you did not file a fraudulent return or knowingly attempt to evade paying taxes.

There are other taxes your attorney can review with you, such as trust fund taxes, tax liens and taxes not covered by the 2 and 3 Year Rules. Because these tax areas can be very complicated, an experienced bankruptcy attorney can be invaluable in helping you sort out what taxes are discharged and what taxes you still owe.

10. After you file bankruptcy do you have to go to court?

With a Chapter 7 bankruptcy you usually have to attend one Meeting of Creditors before your bankruptcy trustee, which takes place 20-40 days after filing your bankruptcy petition. For a Chapter 13 bankruptcy you will have go to court for two appearances before your trustee, for the Meeting of Creditors and the Confirmation Hearing.

If you are seeking extra relief, other court appearances may be required. Your Discharge is entered after all required Plan payments have been made and your certificate evidencing completion of the Instructional Course in Personal Financial Management has been filed.

11. How can you re-establish your credit after bankruptcy?

You can re-establish your credit by getting a co-signer on a loan and also by getting a secured credit card. With a secured credit card you, your credit card will have a limit based on the sum of money you gave the creditor as security for your card.

12. Can you keep a credit card after bankruptcy?

Yes. If the credit card was not adversely affected by your insolvency, most credit card companies will continue to do business with you after filing for bankruptcy.

13. What are the signs that you may be in trouble?

· You’re making balance transfers from one card to another lower interest rate card.

· You are only able to make minimum credit card payments.

· You have maxed out your credit cards.

· You are covering basic living expenses, such as food, with your credit card.

· You’re taking ‘‘cash advances’’ from one card to pay on another.

· You need a co-signer before you can qualify for a car loan.

· You cannot afford health insurance because all of your money is being used to cover revolving debt.

· You are refinancing your house over and over to pay down debt.

· Creditors call you at all hours of the day or night at home or at work.

· Your creditors are calling your neighbors.

· Creditors are filing lawsuits against you.

· Your house is in, or on the verge of, foreclosure.

· The IRS filed a tax lien against you.

14. After filing bankruptcy, what entries will appear on your credit report?

While creditors are supposed to notify credit-reporting agencies when debts are discharged, they do not always do so. As a result, you may have discharged debts still appearing on your credit report. You should send copies of the following documents to the three credit reporting agencies to ensure your credit report accurately reflects your discharges:

· Discharge of Debtor and Order of Final Decree

· Notice of Bankruptcy Case Filing (attached to the front of your petition)

· Schedules ‘‘D’’, ‘‘E’’ and ‘‘F’’ of your bankruptcy petition, together with any amendments of said schedules:

Experian
PO Box 2104
Allen, TX 75013

Equifax Information Services
PO Box 105873
Atlanta, GA 30348

TransUnion
PO Box 1000
Chester, PA 19022

Unless you specifically hire your attorney to do so, it is not his job to clear up any errors on your credit report, once your debts are discharged. You can easily take the above steps yourself and save the expense of additional attorneys’ fees.