Legal News Alert #118

New Bankruptcy Rules Take Effect October 17, 2005

Effective October 17, 2005, new bankruptcy rules go into effect that will in all likelihood adversely impact one’s ability to file for Chapter 7 bankruptcy.  When the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 takes effect on October 17, 2005, it will be significantly more difficult for consumers to erase all debts and make a fresh start.  With today's volatile economy, growing job insecurity, layoffs, and skyrocketing health care costs, even the most prudent borrowers can find themselves in serious financial straits.

With the new bankruptcy rules, consumers who would normally qualify to file for Chapter 7 bankruptcy (which allows one to discharge essentially all of one’s debts without paying anything to creditors) may be forced to file for Chapter 13 bankruptcy, requiring one to make payments according to a strict repayment plan established by the court which can last as long as five years.  

     In a nutshell, there are four important changes to the bankruptcy rules as follows:

1. You could be denied Chapter 7 relief and instead be relegated to a Chapter 13 five year debt-repayment plan;
2. Legal help will cost more, if you can find it;
3. Creditors will have more control over your assets; and
4. You will have to go for debt counseling. 

We at Nichols and Eberth believe that Chapter 7 Bankruptcy should only be utilized as a last resort if for no other reason then to avoid the adverse credit consequences which will haunt you for years to come. However, if you are in the unfortunate financial situation where Chapter 7 Bankruptcy is your only viable option, then the time to act is now before the new Bankruptcy Act goes into effect. We invite you to call Nichols and Eberth at (313) 561-5700 for a free, no-obligation consultation with an experienced attorney.

Nichols & Eberth Offers a Reduced Rate for Wills, Living Wills and Powers of Attorney

The attorneys at Nichols & Eberth, P.C. are very experienced in helping our clients draft testamentary wills, living wills, powers of attorney upon disability and other estate planning documents. And if you tell us that you came to us because of this Legal News Alert, we will discount our usual hourly rate.

NICHOLS & EBERTH, P.C.
22374 Garrison, Dearborn, MI 48124

Free Initial Consultation

Call Dearborn office at (313) 561-5700 or
Call Birmingham, Northville, Troy office at (248) 952-1700 or
Call us toll free at 888-571-5700 or
Send us an email at email@michiganattorney.com