March 23, 2018

What are the changes to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005?

The Bankruptcy Abuse Prevention and Consumer Protect Act of 2005 that went into effect on October 17, 2005, added new requirements for both Debtors and Attorneys. However, the new law still allows debtors to obtain financial relief and the fresh start that they need.

Prior to filing bankruptcy: You must receive credit counseling and obtain a certificate stating that you have done so prior to filing a bankruptcy.

The bankruptcy process: More documentation regarding income and taxes is mandatory. Perhaps the most misunderstood new requirement is the “means test”. The means test is a formula by which a determination is made based on household income and expenses whether a debtor is qualified to file a Chapter 7 bankruptcy or whether a reorganization under Chapter 13 is required.

After filing bankruptcy: You must complete a mandatory debtor education course in personal financial management as approved by the U.S. Trustee. I will arrange for this credit counseling as part of my service.

I hope I have answered some of your questions. If you would like more information or wish to set up a free initial consultation with me, you may call one of our offices at the numbers noted above.