Bankruptcy has always required a statement of the value of collateral property--all of your personal belongings including your car, clothing, furniture, electronic equipment, etc. However, a lowball estimate used to be an acceptable declaration. Now, consumers will need to determine the actual replacement costs of their durable goods, a number which will need to be certified by an attorney. This number can bump up the individual’s net worth and increase the amount of debt for which the filer is ultimately responsible.
Red Tape: Paperwork and Cost
The new Bankruptcy Act will require much more documentation from the filer than ever before. The court will now require income and expense statements, asset and liability statements, proof of prior credit counseling, pays stubs and current and historic tax returns. If any of these forms are missing from your record, your case can be kicked out of court at the judge’s discretion. And if this bureaucracy isn’t easy, it ain’t cheap either. Experts estimate that average consumer will require up to twice as much time from their bankruptcy attorney--that’s right, doubling the legal fee. But don’t be tempted to forgo the legal advice and undertake the process by yourself; if your case is dismissed because of error on your part, a second filing can result in a judgment with harsher, more expensive terms, or even put your collateral, such as your home, in jeopardy. The burden upon the attorney becomes much heavier as well, as the court will now hold the attorney personally liable for the accuracy of the filer’s claim. This burden is likely to increase even further the fees which attorneys will charge before willingly undertaking bankruptcy cases.