The Old Bankruptcy Law Is Dead

20 Nov The Old Bankruptcy Law Is Dead

The New Bankruptcy Law [is] Five Years Old, so says Susanne Robicsek in her October 17, 2010 anniversary blog about bankruptcy reform legislation enacted in 2005. Tragically, now the old bankruptcy law is dead, in that all cases filed under the prior law have concluded, or should have by now. Chapter 7 cases usually complete within a year. Chapter 13 cases require monthly payments that can last up to 5 years, but no chapter 13 case should last longer. So, the last chapter 13 cases filed under the old law on October 16, 2005 have now run up against that 60 month limit and are in the process of closing.

In the rush to file before reform legislation took effect, many people filed bankruptcy to take advantage of a kinder gentler law. Many of those cases were filed in the summer and early fall of 2005. For the past several months of 2010, debtors who completed those 2005 cases received discharges. Those discharges practically issued automatically as soon as the trustee reported the case had completed.

Now, much more is necessary before a discharge issues. Not only must the debtor complete all plan payments, but now the debtor must formally request a discharge and certify certain facts to the court. A typical motion for discharge contains these 6 items:

1. The trustee has filed a Report of Plan Completion in this case.
2. Debtor is not required to pay any Domestic Support Obligations or all Domestic Support Obligations that are due on or before the date of this certification have been paid.
3. The provisions of 11 U.S.C. 522(q)(1) are not applicable.
4. There are no pending proceedings in which debtor(s) may be found guilty of a felony of the kind described in Section 522(q)(1)(A), or liable for a debt of the kind described in Section 522(q)(1)(B). [These sections involve various types of liability related to securities and personal injuries.]
5. Debtor is eligible to receive a discharge under 11 U.S.C. 1328.
6. Debtor has completed an instructional course concerning personal financial management, aka debtor education, and each Form 23, as required by Bankruptcy Rule 1007(b)(7), has been filed with the Court. [This course is an additional requirement to the credit counseling course a debtor must complete to file bankruptcy. Credit Counseling is a prerequisite to start a bankruptcy court and Debtor Education is required to get a discharge at the end of bankruptcy.

Also, today a debtor has to notify creditors of the above request and the court will conduct a hearing to consider any objections filed against the discharge.

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Andy Miofsky, Esq.

Andy Miofsky holds the highest AV PREEMINENT rating from Martindale Hubbell Law Directory and a perfect 10.0 from AVVO. Andy is an Illinois consumer rights lawyer with offices in Granite City Illinois. Andy represents people with bankruptcy and student loan debt problems throughout the Southern District of Illinois since 1979.
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