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Bankruptcy

Less Protection From Creditors' Collection Efforts

Losers: People in the throes of an eviction, a state license suspension proceeding, or a family law proceeding.

One of the most powerful aspects of current bankruptcy law is called the "automatic stay." This jargon refers to rules that immediately halt almost all collection actions and lawsuits against someone who files for bankruptcy. (For an explanation, including a list of common actions stopped by a bankruptcy filing under current law, see How Bankruptcy Stops Your Creditors: The Automatic Stay.)

The proposed law places limits on the automatic stay. Among other things, the automatic stay no longer stops or postpones:

evictions
actions to withhold, suspend, or restrict a driver's license
actions to withhold, suspend, or restrict a professional or occupational license
lawsuits to establish paternity, child custody, or child support
divorce proceedings, or
lawsuits related to domestic violence.

Fewer Debts Wiped Out

Losers: People who recently bought luxury goods or received cash advances, as well as those who owe child support or those who incurred debts through fraud.

Some types of debts can never be wiped out in bankruptcy, and the proposed law expands this list.

Delays in Filing

The proposed law requires most people to get credit counseling from a nonprofit agency before filing for bankruptcy. In addition, debtors have to complete a course on personal financial management before completing either Chapter 7 or Chapter 13 bankruptcy.

Another roadblock delays people who had not yet filed a tax return for a recent year. Anyone filing for Chapter 7 bankruptcy has to provide a federal tax return for the most recent tax year; those filing for Chapter 13 have to be current on tax returns for the previous four years.

More Info on Bankruptcy Law

www.BankruptcyReformNews.com

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