The purpose of the bankruptcy laws is to provide relief to the people who are unable to pay back their creditors. As per the bankruptcy laws, debtors can pay off debts either by liquidate assets or through an alternative repayment plan. Bankruptcy laws also help distressed businessmen to pay off their business debts through reorganization or liquidation.

Bankruptcy laws 2010

In the last few years, there has been an enormous increase in the bankruptcy filings. The foremost reason behind it is the rapid rise in the credit card debts. But as per the bankruptcy laws 2010, it will be very hard to get rid of certain types of debts through the bankruptcy process. This might be a bad news for people with average and high income. But in certain cases, the laws also help individuals to pay off their debts faster. The new bankruptcy laws are designed to provide individuals incentives to handle their debt sensibly. Any person who violates bankruptcy laws is liable to be punished.

According to the latest report released by American Institute Of Bankruptcy, around 70 % of people file Chapter 7. Under Chapter 7 bankruptcy, debtors can easily discharge unsecured debts like credit cards and medical bills. But according to the new bankruptcy laws 2010, the consumers with more than average income will be compelled to file under Chapter 13. This implies that consumers have to pay off a certain portion of the debt. Courts will conduct a strict means test to decide who can qualify to file under Chapter 7 bankruptcy. Under the new laws, the fees of the bankruptcy lawyers are likely to increase. The attorneys are required to file tax return and pay the invoice for income verification.

Earlier, it was very difficult for the consumers to refinance their mortgage loans once they have filed bankruptcy. Consumers (who have filed bankruptcy) are advised to rebuild their credit, but their mortgage refinance applications were declined. Now, with the new bankruptcy laws, individuals’ refinance or mortgage modification applications are likely to be approved since it is tailored to bankrupt. This is indeed good news for the people applying for mortgage loans post bankruptcy.