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The Changes Brought By the New Bankruptcy Laws

The new bankruptcy laws have come into effect from October, 2005. - If you are planning to file a court petition for bankruptcy, but you are not aware of the changes brought by the new laws, you may have to face a lot of difficulties during the bankruptcy declaration proceedings in the court. - What is more, the unawareness of the new laws may also make it difficult for you to defend your bankruptcy claim. - This article intends to give you a brief insight into all the latest changes that these new laws have brought. *Personal Bankruptcy - The major changes that the new bankruptcy laws have brought are mostly regarding the personal bankruptcy. - Before the introduction of these laws, it was optional for the debtors to file for bankruptcy either. - However, now, it has become mandatory for them to go through certain tests, in order to determine which type of bankruptcy they are eligible for. * Means Test - In this regard, the first test that the debtor has to pass before filing bankruptcy is a Means Test. - As per this test, the debtor\'s total income from all the sources is evaluated. Then, the evaluation of the debtor\'s essential expenses is done. - These essential expenses are the expenses that the debtor cannot live without, such as food, cloth, home etc. Now, the amount of the essential expenses is deducted from the gross income, in order to evaluate the net income that is left with the debtor. - As per the new bankruptcy laws, if this net income is greater than the median income of the state, the debtor is eligible for filing for bankruptcy under, as per which the debtor will be allowed to continue with their business operations along with making the repayments for their debts, based on the suggested repayment plan by the bankruptcy court.