1) Prior to filing for bankruptcy protection, debtors
are required to submit to credit counseling and meet
other obligations intended to dissuade them from seeking
bankruptcy protection.
2) There is now a "means" test that limits
access to a straight liquidation of debts under Chapter
&. Generally, if the combined gross income of the
debtor's family is greater than the median family income
in his or her state, he or she will be placed in a 36-60
month repayment plan under Chapter 13 rather than
getting the coveted "fresh start" under
Chapter 7 of the bankruptcy code.
The
news is not all bad for debtors. The new law increases the
exemption for retirement funds, exempts personal
residences owed for at least 40 months, and protects funds
properly transferred to asset protection trusts (e.g.,
Alaska or Delaware asset protection trusts). There is also
a mild incentive for creditors to work out repayment plans
outside of bankruptcy. A court may reduce an unsecured
consumer debt claim by up to 20% if the claim was filed by
a creditor who unreasonably refused a reasonable
alternative repayment schedule proposed by an approved
credit counseling agency on the debtor's behalf.
New
Exemption Limit on IRAs. The new law places a limit of $ 1
million on the exemption for traditional and Roth IRSs.
Qualified plans, e.g., 401(k) and 403(b) plans, SEPs and
Simple IRAs enjoy an unlimited exemption.
More
Responsibiity for Bankruptcy Attorneys. Under the new act,
the person preparing a bankruptcy petition must give
assurances about the accuracy of its contents. Attorneys
must make a " reasonable inquiry to verify that the
information contained in such documents is well grounded
in fact."
