Wallace Law Office..........

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THE NEW BANKRUPTCY LAW

Bad Law. As you may know, the credit industry purchased enough votes in Congress to pass what we refer to as "Crooked Creditor Protection Act of 2005". This new bankruptcy law allows credit card companies and other lenders to continue engaging in deceptive and predatory lending practices while taking away the rights of American citizens to obtain protection under the bankruptcy laws. The credit industry wrote many traps into this law intended to get your case dismissed or to penalize you for filing a bankruptcy. Only a lawyer skilled in bankruptcy can assure that you will not fall into one of those traps.

Paralegals. It was risky to use a “paralegal” before the new law was passed, and it is downright crazy to use one now. In the past, most of the damage done by these typists could be undone by paying a lawyer additional fees to fix it. Under the new law, a paralegals mistake can result in you being penalized or having your protection under the bankruptcy laws limited. Remember, a “paralegal” cannot give you legal advice so they cannot possibly explain the new law to you.

8 Year Limitation. There is an 8 year waiting period from the date of the last chapter 7 filing to a new filing.

Debts in Divorces, Legal Separation, Separation Agreements. The new bankruptcy law provides that you cannot be relieved of the obligation to pay any debt you are ordered to pay to a spouse, former spouse, or child in a divorce, legal separation, or separation agreement. Many people agree to pay the other party substantial amounts in a divorce or legal separation because they do not take time to consider whether or not they really have the ability to pay. This can be a real trap for the unwary. By the time they realize they cannot pay the money, it is too late because even bankruptcy will not save them. Before you agree to pay any amount in a divorce or legal separation, you had better consider the fact that you no longer have the right to file bankruptcy on that debt. Your ex-spouse will have the right to continue to collect from you even after a bankruptcy!

Pay Stubs and Income Tax Returns. The new bankruptcy law requires you to file copies of all pay stubs or other evidence of income covering the 60 days before the filing of the bankruptcy. In addition, you must provide a copy of your most recent income tax return to the bankruptcy trustee at least 7 days before your meeting of creditors. Failure to file these documents will result in dismissal of your case, so you had better hang onto your pay stubs and income tax returns!

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