The new bankruptcy law that has come into effect has a few major changes that state how bankruptcy will be treated by the government and by the people. So it would be wise for any individual who is thinking of filing for bankruptcy to be well-informed of the new law and all the important changes in it. One of the main changes is about mandatory credit counseling. Anyone who wants to file for bankruptcy will now have to undergo this counseling and it will have to be done by government-accredited counselors. This measure has been introduced probably to make people aware just how serious bankruptcy is. So many people think of getting into this without thinking about how big a step this is and what the consequences can be. With this counseling being mandatory, hopefully there will be a fall in people filing for bankruptcy and a rise in credit ratings of a lot more individuals. The second change pertains to the â€means test’ and it hopes to deter people from filing for bankruptcy just so that they do not have to pay their debts. With this, the government hopes to screen people who file under Chapter 7 to find out if they really are at the end of their tether and cannot pay their debts. It just makes sure that people take their liabilities a bit more seriously and do not resort to filing for bankruptcy just to get out of paying their debts. There is a move for more to file under Chapter 13 where people can consolidate their debts and then repay them in regular amounts that they can afford. So people get a lot more serious about their debts when they realize that they cannot just be written off but that they have to repay them. However, they can do so in amounts which are more reasonable as far as they are concerned. Another change is that there are not so many protections anymore. Earlier, filing for bankruptcy meant that the person was protected from all his creditors, no matter what. Now, this â€automatic law’ has some provisions. Just because a person has filed for bankruptcy, it is not as though he cannot be thrown out of the house he hasn’t finished paying for or his license not suspended or that he can’t have divorce proceedings started against him. The law no longer renders creditors powerless and there is better justice all around. The new law has a high priority for alimony and child support. So the first amounts are paid out here rather than to the creditors. Earlier, creditors were given first priority when the assets were taken over. Now, family members and their needs come before them. It’s one way of making sure that those who actually need the money get it first. Those who file for bankruptcy have to attend financial-management lectures too. The attendance at these is compulsory. The debtors have to sit through workshops and seminars so they understand how to manage money. A fresh new start does not mean that their lack of financial management skills will be overlooked. They have to be equipped with these skills so it does not happen to them again. The government hopes that with this law, there will be no inclination to try and file for bankruptcy again.
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