New Bankruptcy Rules

By: Nick LaFave
By: Nick LaFave

Mike Opolski has a wife and two kids. But, a recent illness has forced him out of work, into a battle with his insurance company and into bankruptcy to save his family's home.

Mike filed for chapter seven bankruptcy... a complete elimination of debt after the liquidation of certain assets. He files for chapter seven before President Bush signed the bankruptcy reform package on Wednesday.

That reform will require bankruptcy lawyers to do much more work on behalf of their client - which will wind up costing them more money.

The plan will also dictate which bankruptcy plan an individual can file. A person who makes less than the average income of their state will be eligible for chapter seven (total elimination). But, for a person who makes more than the average income of their state AND can afford to pay six-thousand dollars over five years ($100 a month), they will be forced into chapter 13 bankruptcy... which is a repayment plan.

It will also require credit and debt counseling for anyone wishing to file bankruptcy. President Bush says the plan will help to eliminate fraud and make the system more fair for everyone... and Opolski agrees.

But, some personal bankruptcy lawyers say the plan is will wind up hurting the individual in the long run... and suggest people file for bankruptcy before the law takes effect in six months.


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