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The Government Changes the Rules.
You probably heard that
new bankruptcy law that took effect October 2005 was
supposed to force people out of Chapter 7
get-out-of-debt bankruptcy and into Chapter 13 debt
consolidation plans.
It didn't. When the new law first took
effect, not many people around here were affected.
Why?
Under the new law, everybody
is assigned a budget--for food, clothes,
transportation--and based on that the court decides if
you should have money left over to pay your
debts. That assigned budget took into account the
high cost of living in places like Northern Virginia.
People who really didn't have money left over were still
allowed to wipe out their debts.
In January 2008 the
government tried to change that. The government
has handed down a new budget that cuts
way back on what people in Northern Virginia are allowed
to spend on food, clothing, and transportation.
It's hard to believe, but in the face of $3.00 per
gallon gasoline, the monthly transportation allowance
for one car was was cut from $350 per month to
$208.
For people with long
commutes (and Prince William County has the longest
average commute of anywhere in the country, outside of New York City), $208 just might cover
gasoline and car insurance--leaving nothing at all for
tires, maintenance, repairs. It's a
ridiculous figure.
This new budget also cuts
way back on what the government thinks you should spend
on food; it assumes that food doesn't cost any more
here, than say in Culpeper.
Even so, we can usually get
it to work.
On some things, the assigned
budget is easy on some people. (The bank
lobbyists who wrote the new law for Congress weren't
exactly rocket-scientists; they didn't not much
about bankruptcy law, and they didn't know--or
care--about what hard working people do to survive.)
So some breaks are built
into the law; and if good planning, we can usually set
you up to take advantages of the breaks, and
offset the areas where the law is unfair.
This means we will do
everything legally possible to do to arrange your
situation and present it to the court, so that you can
get approved for a Chapter 7 wipe out your debts
bankruptcy. (Assuming, which is true for most
people, that Chapter 7 is best for you.)
And if you end up in Chapter
13, we'll fight to hold down your repayment to the legal
minimum, so that at least you end up with a lot more
breathing room than you have now.
More Big Problems with the
New Law.
The 2005 Bankruptcy Law
doubled the size of the bankruptcy code; it did a lot
more than than just assign you a budget.
Your paperwork is a lot
harder. Under the old
law there was a presumption--a legal assumption--that
you were eligible to file a Chapter 7 get-out-of-debt
bankruptcy. Now you have to prove it.
There are new rinky-dink
requirements--hoops you have to jump through:
taking two classes on the internet, saving your pay
stubs for six months, showing the court your social security
card, tax forms and bank statements.
The people behind the new
law sold Congress on the idea that all these
requirements and paperwork would make the system more
honest. The result--which is what the lobbyists
really wanted--is that people who are distracted
and worried sick--like you, right now--have all this
additional burden to face. They want you to break
down, give up, make mistakes that they can use to beat
you with.
Another thing. The enforcement
now is very different. Investigators from the
Justice Department now check behind you, running a
computer search, looking at your bank statements, trying
to catch you.
To get through all this, you
need documents, details and discipline. They can be in
short supply when you are panicked about money.
We'll do our best to help you with clear explanations of
what you need to do and how we are working together.
One last thing. The
new law is especially tough on people with big families;
the government is likely to claim that people with three
or four children are spending too much on food and
clothes and rent, when all they are trying to do is take
care of the kids. This is one of the things that makes
me the maddest about the new law.
Your Free Consultation and Your
Homework.
All this has made big
changes in the way I do my job.
Under the old law, I offered a
free consultation to anybody who wanted to
talk to me. I can't do that any more. The new law is is just
too tricky.
So, now I still offer you an hour free consultation
but you first have to do your homework. You
have to come in with the information I need to be able
to really answer your questions.
Only then can we work up a
plan to get you from where you are, to where you need to
go.
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