When Bankruptcy Laws Change Mid-Filing: What To Expect

21 March 2016
 Categories: , Blog


Bankruptcy laws have undergone some overhauls in recent years. The changes were made to prevent frequent and ridiculous expulsions of debt but still allow responsible people the ability to address their debts and choose how to deal with them. For those who were filing for bankruptcy just as the laws were being changed, there was probably a lot of concern. If and when you choose to file for bankruptcy and the laws change again, here is what to expect from the bankruptcy courts and your lawyer.

Filing Bankruptcy as the Laws Change

If you are right in the thick of filing for bankruptcy under the current laws, your paperwork for your hearing was filed before the new laws were set in stone. That means that you will probably be "grandfathered in" under the old laws for filing purposes and the new laws do not affect your case. If you had started the filing process, but asked your bankruptcy attorney to put the process on hold, you may be stuck filing under the new laws because your paperwork was not yet in the system when the new laws became effective.

Finishing a Bankruptcy Just after the Laws Change

If you had filed for bankruptcy, your paperwork was already in the system, but for whatever reasons you put the court hearing on hold, you may still be grandfathered in under the old laws. The area of bankruptcy law here is somewhat gray, but not unprecedented. Your lawyer only needs to argue that you had to put your hearing and final bankruptcy decision on hold while you addressed some personal matters and the judge may agree to a bankruptcy proceeding under the old laws. (Sometimes soldiers serving in foreign tours might file for bankruptcy before leaving for duty, but cannot appear for the court hearing, so they put things on hold. When they return, they find that a lot of laws may have changed in their absence. This is one such example of an extenuating circumstance that the courts may accept.)

Racing Against the Clock

Usually, lawmakers will alert citizens to the exact date that new laws take effect. This will help your lawyer decide when your deadlines to file are so that you can avoid any headaches or extra paperwork that would be needed to file under the old bankruptcy law. He or she can also schedule your hearing dates as soon as you are able to squeeze in a date, preferably several days to a few weeks before the new laws begin, in case the courts cancel your hearing.