There has been a lot of talk about the new bankruptcy law that was passed by Congress in 2005. What exactly were the changes, and how will they affect your eligibility for bankruptcy?

The idea behind the recent bankruptcy law was to limit the abuse of the system. The new statute is supposed to help determine whether people really need to declare chapter 7, even though many lawyers and consumers disagree. Regardless of what you think about this new statute, you have to get used to it (at least until you convince your congressman to change it).

So what does the new bankruptcy law mean to you? For one thing, you’ll be required to attend credit counseling classes within 180 days before filing personal bankruptcy. You may be able to do this online or over the phone instead of attending a live class. You’ll have to produce a certificate that proves your attendance, but you may be able to get an extension from the court if you were not able to take it before filing a petition.

You have to make your tax return available to any creditor who asks for it, and you also have to get your pay stubs together for the last 60 days before you filed Chapter 7. After your successful Chapter 7 case, you’ll also have to attend the financial management class to help ensure that you do not repeat your mistakes and end up in bankruptcy court sometime in the future.

Will you still be eligible for Chapter 7? Well, one lawyer estimates that only 3% or so of people that would have been eligible previously will no longer be able to file Chapter 7. In other words, most people will still be eligible, even though they may have to go through additional hurdles.

Specifically, if your salary is greater than the median salary for your state, you will have to take a more involved test to determine whether you can afford to pay some of your debt. If you fail this test, you may be forced to declare Chapter 13 which involves a partial repayment plan.

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The foreclosure is a process by which the lender realizes unpaid dues from the borrower. When a loan is taken to purchase a house the latter is kept mortgaged as security to the lender until the loan is repaid. The borrowers make monthly payments to the lender that includes the rate of interest and partial repayment of the principal. When the borrower lags behind and fails to make the payments then the lender, before actually foreclosing sends a foreclosure notice or NOD (notice of default). Technically it is known as Notice of Assessment Lien Foreclosure Sale.

The foreclosure notice addresses the borrower and states that the person is warned that since payments are due steps will be taken to realize it as per provisions of the laws of the state.

Till the date of issuing of the foreclosure notice, a lien exists on the mortgaged property for unpaid assessments as well as charges incurred from a certain date till the date of the foreclosure notice. Till then no legal action has been taken to collect dues. With the start of these proceedings all previous action, if there had been any, is dismissed.

In the foreclosure notice the lien holder claims that the lender has so far observed all the steps required but is now taking action to speed up realization of past dues. The amount due till then is stated. The names of all the parties are listed.

The lien holders or lender will now foreclose on the property that has been described in the foreclosure notice. The debt has to be paid. In addition all extra assessments till the date of the sale together with legal fees and other costs will have to be paid.

The foreclosure notice also refers to the redemption period – this being dependent on the laws of the particular state in which the property is situated. During the redemption period the borrower is permitted to clear the pending dues and escape foreclosure. Generally the redemption period is six months. It is sometimes reduced to five weeks.

The foreclosure process is as old as the time when man started to lend and borrow. But what is new is the staggering number and that most of them are from the sub-prime mortgages that had been contracted during the last couple of years. These were peddled to the underprivileged section of American society that did not understand what they were inking.

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The goal of Chapter 13 bankruptcy is to help you create a payment plan so that you can pay off part or all of your debt during the next three to five years. But how do you determine whether you have to pay a creditor in full instead of settling for pennies on the dollar during a Chapter 13 bankruptcy plan. Well, that largely depends on the kind of debt that we’re talking about.

There are some kinds of financial obligations labeled as priority claims. These kinds of debts must be paid off completely during the repayment plan. Some types of priority claims include child support obligation and back taxes. If you have these kinds of financial concerns, then you will need to create a payment plan in which you pay off these priority claims completely. If you are not able to do so, you may not qualify for Chapter 13.

What are some other eligibility requirements for Chapter 13? Well, for one thing, there is a maximum amount of debt. To qualify for Chapter 13, you should not owe more than $922,975 in secured debts. You should also not have more than $307,675 in unsecured debt. If you’re wondering about the difference between secured debts and unsecured debts, it’s actually pretty simple. A secured debt means that there is an asset that can be repossessed such as your car or your house. Unsecured debts, such as credit cards, are not backed up by any collateral.

Your eligibility for this kind of bankruptcy and the exact terms that you are given also depend on your recent filing history. If you have filed with a bankruptcy court for any kind of relief during the last few years, this may change your situation considerably. If you were given a discharge recently, you’ll be treated differently. How so? Well, assuming you qualify for another discharge to begin with, you’ll probably have to pay off all of your debt to the creditors during a repayment plan instead of simply settling for a fraction of the cost.

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