Monday, January 13, 2014

Bankruptcy Discharge is for Honest Debtors



The U.S. Bankruptcy Code, which was enacted in the late seventies, governs all bankruptcy cases with the federal laws. There is a set of rules that guides all bankruptcy courts. Bankruptcy cases also employ the state laws and rules. The objective of the Federal law is to make sure that all of the laws on the subject of bankruptcy are kept consistent in order that the bankruptcy process may continue benefiting debtors.

The bankruptcy code was significantly modified in the year 2005. A new bankruptcy law was passed, the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). The changes were made as a way to lessen the volume of bankruptcy case filings under Chapter 7 of the U.S. Bankruptcy Code, and make debtors repay their debts even just a portion of them. The BAPCPA is advantageous for banks and credit card companies because it made filing a Chapter 7 bankruptcy case more difficult for debtors and so they file for Chapter 13 case instead.

There were many serial bankruptcy filings before the BAPCPA had taken effect. The Congress modified the old bankruptcy law because of that. There were dishonest people who stacked up their credit card debts, then declared bankruptcy to discharge them, and do the same things all over again. In order to prevent this cycle, the guidelines had to become more rigid.

One of the most significant additions in the bankruptcy process is the means test. The means test is intended to put a limit of income to be eligible to file for Chapter 7 case. The income of a bankruptcy filer will be compared to the median income of the state. The means test will likewise evaluate the debtor's earnings against expenses. Due to the additional requirements and more restrictive procedures, it became clear that one will need a Bankruptcy lawyer San Antonio when filing for bankruptcy.

In this technologically cutting edge time, to lie on one's bankruptcy petition is a bad idea. Bankruptcy trustees have a lot of resources to obtain private information about debtors. Filing for bankruptcy is meant to give a new financial start to the honest but unfortunate persons. Bankruptcy trustees will review the history of a house, property, or financial assets which had been transferred. As simple as checking on social media in the Internet will uncover personal information of a person. A case can be dismissed if the trustee finds out that the debtor omitted a property. There are even uncommon occasions when a bankruptcy trustee goes as far as looking for a property to verify if all assets have been declared by the debtor. The implications of lying in bankruptcy filing are often more severe than the troubles that caused the debtor file for bankruptcy to start with. 

Attempting to defraud creditors is damaging both to the debtor as well as his or her bankruptcy case. Bankruptcy cases are governed by the federal law and to be charged with fraud and perjury have severe effects.



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