The new law adds a number of new requirements for bankruptcy filers
that attempt to make the filing process more difficult and costly.
These additional requirements include:
Mandatory credit counseling and debtor education. All potential bankruptcy filers must now undergo credit counseling via
an “approved nonprofit budget and credit counseling agency” prior to
filing for bankruptcy. Chapter 13, Chapter 7, and Chapter 11 filers
must also complete a course in “personal financial management”.
Additional filing requirements and fees. The new law increases the amount of paperwork involved in filing and
raises the filing fees. The law also allows filing fees to be waived
for debtors earning below 150 percent of the federal poverty level.
Increased attorney liability and costs. Attorneys representing bankruptcy filers are now required to conduct an
investigation of their clients' filings and can be held personally
liable for inaccuracies. Most bankruptcy attorneys predicted that this
will result in increased attorneys fees and will make attorneys less
likely to take on some cases. In addition, bankruptcy filings are now
subject to audit in a manner similar to tax returns.
Fewer automatic protections for filers. The new law eliminates some of the protections bankruptcy filers
previously had, such as stopping or delaying evictions, avoiding
driver's license suspensions, and delaying child support proceedings.
Increased compliance requirements for small businesses. The new law increases the bureaucratic compliance obligations and
shortens the deadline for Chapter 11 reorganizations involving small
businesses, a series of new requirements not applicable to larger
businesses.
Increased amount of debt repayment under Chapter 13.
The new law made several changes that effectively increased the amount
of debt that Chapter 13 filers will have to repay. In addition, the
"super discharge" provision, which allows filers to discharge many of
their debts under Chapter 13 in return for agreeing to a payment plan,
is significantly curtailed under the new law.
Increased length of time between discharges. The new law increases the length of time from six to eight years
between which a filer can receive a Chapter 7 discharge after a prior
Chapter 7 case.
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