Even though bankruptcies are approved in federal court, the laws surrounding bankruptcy vary by state. Belongings that are exempt in Oregon, for instance, may not be exempt in Ohio or New York. Chapter 13 has also allowed for some flexibility or creativity to restructure consumer debt and make it more manageable. That could soon change, however.
Chapter 13 bankruptcy forms haven’t changed in more than 20 years. As part of proposed reform to the laws, the forms have also been revised. The instructions are more extensive and the forms contain more checklists than before. This is one way that bankruptcy reform will make filings more uniform and reduce errors. Another significant proposed change is that both secured and unsecured creditors would be required to file a claim within 60 days. Lien avoidance would also be available for debtors. The ultimate goal of the plan is to accelerate the process by making it easier for everyone involved—judges, attorneys, debtors and creditors—to review the bankruptcy plan. Shorter deadlines also mean that any potential problems that could cause a Chapter 13 bankruptcy filing to be dismissed will be discovered earlier in the process. If approved, the changes will be effective Dec. 1, 2013.
With or without the proposed changes, there are many complexities of the law that need to be considered when filing for bankruptcy. Those who are considering Chapter 13 as a way to find debt relief would be advised to hire legal representation to guide them through the process.
Source: Akron Legal News, “Changes in the works for Chapter 13 bankruptcy filings,” Sherry Karabin, Nov. 15, 2013.