On March 21, 2010 the Supreme Court published an opinion on Hamilton vs. Lanning. Although the case is just one of the many like it, this one in particular has a significant impact on the way bankruptcies are filed. Not only does it allow the debtor to change the way they look at their current situation, but it also affects the way attorneys do as well. It doesn’t alter the actual process of how bankruptcies are filed, except when you look at the numbers, which makes quite a big impact on the debtor.
Traditionally, Texas bankruptcy cases have been determined by a mechanical approach which uses your past to define your future, but things are changing in the laws. As a result, people were left to rely on their past to determine their future. But what if your financial situation changes? Perhaps you have been laid off and you are no longer making the money you were three months ago. This is going to drastically affect your means test, which determines what type of bankruptcy you are eligible to file for. The Lanning ruling allows more realistic projections to affect the results of your bankruptcy.
More recently, people have been applying for modifications if their financial status severely changes. The Lanning ruling helps avoid modifications by allowing the debtor a more realistic viewing of their current financial status. The wording of the new law refers to projected income which is merely a prediction of what your income is going to look like based on things that are already known or are even definite. Presenting this information to the judge may take some preparation time, which ultimately delays the process.
Unfortunately filing for bankruptcy for most people in Dallas is a time sensitive process and may want to be done as quickly as possible. As much as the Lanning ruling helps the debtor it can have negative effects, but as a whole the advantage far outweighs the disadvantages. This monumental change is a rational movement towards financial stability, and simply the most practical way to identify what the debtor can and cannot afford.