New BK laws and waiting to file

[smkat]

What is the name of your state? AZ

How long can a person wait to file before they'll be caught under the new BK laws? My husband and I have been planning to file for a while now but keep running into snags that have delayed it... we're getting close to being able to now, but I'm concerned about the new BK laws... I want to make sure we can still file before it's effective.

And, if the law goes into effect before our BK was discharged does that change how it's handled, or is it dealt with by the laws that were effective at the time of filing?

 

[absconder]

All the lawyers are AWOL presently. Good questions I know GW is going to sing it or already has.

 

[chris7]

You have some time

Even if the law was signed today it would be six months before it took effect. That being said, if it were me, I would not wait too long because once the law is signed there will probably be a mad rush where everyone tries to file at once. If you are going to use a lawyer, do a free consultation with one your thinking about and ask him/her what they think as far as a timeline.

 

[toughluck73]

I would talk to a lawyer because some provisions (primary those dealing with homestead exemptions) will go into effect immediately. So if you own a home, talk to a lawyer today because the lawyers I have spoken to have a 2-3 week waiting list for a free consultation due to what seems like the inevitable new law.

 

[smkat]

Well, we don't own a home so I'm not worried about that... I guess the new laws confuse me... I can't make heads or tails of it, what's changing and how it will impact us.

If we were to use a lawyer it would be at least a year before we could save the money for lawyers fees, literally... we had a consultation with a lawyer about a couple months ago, but I left feeling more confused than when I went in.

So, for a family with basically no assets (we have a car, but the lawyer said it would be discharged and we could keep it as long as we continued to make the car payments), is there anything we need to worry about regarding the new laws? Are the state exemptions changing? If so, where can I find what they will be?

Thanks again!

 

[toughluck73]

Well, you have two options. One is to go at it alone, without a lawyer. The other is to wait until you have the money to pay for one. One of the biggest drawbacks of the new law is that it’s going to make lawyers more liable for their clients, in cases where there inaccuracies. This in turn means that they will be increasing their fees, so if you can’t afford one now, you won’t be able to afford one later. (I realize this is a catch 22) Also, they will probably force you to go through credit counseling for six months, which will likely cost you. Also, they will make every attempt to force you to file Ch. 13 instead of Ch. 7 (which one are you currently thinking of filling? Ch 7 I’m assuming). As of now, no one knows for sure what the new laws will mean, as they could change between now and the time the law passes, but it looks as if it’s going to be more expensive and if you earn at least the state’s median income (depends on your family size and income) you won’t be able to file Ch. 7, so it will be harder for you to qualify to get debts discharged. As for your questions,



“And, if the law goes into effect before our BK was discharged does that change how it's handled, or is it dealt with by the laws that were effective at the time of filing?”

The day you file is the official day, so if the new law goes into effect, you will have 180 days from the time the president signs it, which means you could file on day 179 (I wouldn’t wait this long) and still be considered under the current laws.

And for more info check the websites below concerning the new proposed law. The last one gives you an idea what current exemptions are available for your state, which I don't believe are changing but you want to make sure on that.

http://www.bankruptcyfinder.com/bankruptcyreformnews.html

http://www.bankruptcyaction.com/bankreform.htm

http://www.bankruptcyaction.com/azexemptions.htm

 

[bigun]

Are you still paying on any debt that you are going to discharge in bk? If so, quit paying it and put that money towards legal fees.

 

[Ladynred]

You can find a very readable (not legalese) summary of the new law here:

http://abiworld.net/bankbill/ - look for the Synopsis on the right-hand side.

 

[smkat]

Thanks for all the info! I really appreciate it... some sites I've seen are so confusing that reading answers in laymans terms is refreshing!

Oh, and to answer the question, no, we're not paying anything towards past debts... unfortunately at the end of the month we're actually losing money... we get in $1500 each month, and our monthly expenses are $1800... so, you can see the bind we're in.

Thanks again!

 

[JoeShmoe]

Smkat

The big change I understand is they want to push Chapter 7's up to Chapter 13's.. And collect at least 100 per month for 60 months. You will have to meet tougher criteria for a chapter 7 under the new law than if you file now.

I Also believe the only way you will get less than a 60 month plan is to be able to pay 100% in less than 60, otherwise all will be on a 60 month plan.

File now is my advice to you.

Joe

 

[Ladynred]

I Also believe the only way you will get less than a 60 month plan is to be able to pay 100% in less than 60, otherwise all will be on a 60 month plan.

Nope, the BIG and NASTY in this bill as far as 'qualifying' for a CH 7 and the basis for Ch 13 payments is the 'means test'. If your income is above the IRS 'median income' for your state, you will be FORCED into a 5 YEAR CH 13, there will be NO 3 year CH 13 as far as I can discern and I've read so much on this legislation I'm going cross-eyed ! If you are FORCED into a CH 13 plan, what you're allowed for expenses will NOT be your ACTUAL, it will be what the IRS allows for tax evaders, and believe me, those IRS collection standards are insanely out of whack. They were NEVER meant to be applied to bankruptcies.

Read this, its long, but you'll get the full story on what's so bad about this bill:
http://rawstory.com/exclusives/dissenting_views_bankruptcy_405.htm

 

[bigun]

To the OP,

BK will not solve your problems if you only make $1500/month. It'll get old creditors off your back but you 2 really need to increase your income drastically.

 

[absconder]

Good article Lady seems like big biz wrote the bill without any input from regular folks.

 

[Ladynred]

Big Biz doesn't give a rat's patoot about 'regular people' and from the looks of it, neither do the pinheaded politicians who've been BOUGHT by these corporations. The credit card companies DID write this bill.. and its ALL in their favor !!

 

[smkat]

To the OP,

BK will not solve your problems if you only make $1500/month. It'll get old creditors off your back but you 2 really need to increase your income drastically.

We're aware of that, and working towards it... I should also add the $1500 is after taxes, insurance, everything... before all that my husband actually makes a decent wage ($15.23 hr), and has been at his job for 11 years. Unfortunately I was fired back in November, and now am due to have a baby soon, so we're really stuck. Right now we really desperately need to get the old creditors off our backs... one is threatening to garnish my husbands wages, and we're already struggling so hard as it is, well... we can't afford to lose more income. We can't answer our phone anymore. We know BK isn't the answer to all our problems, but it'll give us at least some peace and hopefully we'll be able to begin rebuilding our credit. We don't get behind on our basic monthly charges thanks to my mom helping us out, so this will at least bring us up even so we can start again. We just don't want to live in fear of garnishments and harassing phone calls anymore.