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Legal IconUnderstanding the 2005 Bankruptcy Law

The Law Library also holds the following books of interest on bankruptcy:
Read more about Bankruptcy
You'll also find all of these books on bankruptcy available at Lycoming County Library System Libraries.

Bankruptcy: Is It the Right Solution to your debt problems?
written by Robin Leonard
published by Nolo in 2003.
The call number is 332.75 LEO. Note that this title refers to the previous bankruptcy laws. It would be useful in broad category, rather than specific detail.

The New Bankruptcy: Will It Work for You?
written by Stephen Elias
published by Nolo in 2005.
The call number is 346.73 ELI. Discover if you qualify for Chapter 7; details how Chapter 13 repayment plans work, and which debts are wiped out.

Chapter 13 Bankruptcy: Repay Your Debts
written by Robin Leonard
published by Nolo in 2005.
The call number is 346.73 LEO. This is a plain-English guide to saving your house and property, creating a repayment plan, stopping garnishments and attachments, preventing harassment by creditors, and rebuilding your credit. General forms are included.

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 applies primarily to cases filed on or after October 17, 2005, according to Title 11 of the United States Code.)

Chapter 7 of Title 11 is titled Liquidations, and deals with the elimination of debt. Chapter 13 concerns itself with the Repayment of Debt by Persons with Regular Income. Chapter 13 requires a written repayment plan as a part of the bankruptcy process, while Chapter 7 does not.

The level of a debtor’s income is a factor in determining whether to file for Chapter 7 or 13. A “means test” is used to calculate the “disposable income” at the time of the bankruptcy filing. The “means” referred to here are those assets that can be used to satisfy, in whole or in part, the debts of the filing party.

A filer must be a resident of the state in which the filing occurs for two years prior to the date of filing in order to use that state’s exemption rules. If not resident for two years, the filer must use the rules of the state in which they resided for the majority of the previous 180 days (about six months).

“Automatic Stay” protections are fewer under the new law, and protections designed to delay evictions, suspend legal actions or divorce proceedings are more narrow and specific under the new law.

A Chapter 7 debtor may be an individual, a partnership, or a corporation or other business entity. 11 U.S.C. §§ 101(41), 109(b).

A Chapter 7 bankruptcy case does not involve the filing of a plan of repayment as in chapter 13. Instead, the bankruptcy trustee gathers and sells the debtor's nonexempt assets and uses the proceeds of such assets to pay holders of claims (creditors) in accordance with the provisions of the Bankruptcy Code. Part of the debtor's property may be subject to liens and mortgages that pledge the property to other creditors. In addition, the Bankruptcy Code will allow the debtor to keep certain "exempt" property; but a trustee will liquidate the debtor's remaining assets. Accordingly, potential debtors should realize that the filing of a petition under chapter 7 may result in the loss of property.

A Chapter 7 debtor will not receive a discharge of current debts, if a prior discharge was granted within 8 years of the new filing.

NOTE: The above information is not intended to be a substitute for legal advice or representation. Consult an attorney if you have questions about how this information relates to your specific situation or circumstance.

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